NOTE 3: GOODWILL AND INTANGIBLE ASSETS
Goodwill. Changes in our goodwill balances for the year ended December 31, 2025 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| (dollars in millions) | Balance as of December 31, 2024 | | Acquisitions and Divestitures | | Foreign Currency Translation and Other | | Balance as of December 31, 2025 | | |
| Collins Aerospace | $ | 32,223 | | | $ | (255) | | | $ | 808 | | | $ | 32,776 | | | |
| Pratt & Whitney | 1,563 | | | — | | | — | | | 1,563 | | | |
| Raytheon | 18,986 | | | — | | | 1 | | | 18,987 | | | |
| Total Segments | 52,772 | | | (255) | | | 809 | | | 53,326 | | | |
| Eliminations and other | 17 | | | — | | | — | | | 17 | | | |
| Total | $ | 52,789 | | | $ | (255) | | | $ | 809 | | | $ | 53,343 | | | |
The Company reviews goodwill for impairment annually or more frequently if events or changes in circumstances indicate the asset might be impaired.
We completed our annual goodwill impairment testing as of October 1, 2025 and determined that no adjustments to the carrying value of goodwill were necessary. We assessed all of our reporting units using qualitative factors to determine whether it was more likely than not that any individual reporting unit’s fair value is less than its carrying value (step 0) and determined that no further testing was required.
Intangible Assets. Identifiable intangible assets are comprised of the following:
| | | | | | | | | | | | | | | | | | | | | | | |
| | 2025 | | 2024 |
| (dollars in millions) | Gross Amount | | Accumulated Amortization | | Gross Amount | | Accumulated Amortization |
| Amortized: | | | | | | | |
| | | | | | | |
| Collaboration assets | $ | 6,234 | | | $ | (2,374) | | | $ | 6,159 | | | $ | (1,996) | |
| Exclusivity assets | 3,980 | | | (258) | | | 3,692 | | | (361) | |
| Developed technology and other | 1,192 | | | (758) | | | 1,197 | | | (698) | |
| Customer relationships | 29,338 | | | (13,989) | | | 29,388 | | | (12,401) | |
| | 40,744 | | | (17,379) | | | 40,436 | | | (15,456) | |
| Indefinite-lived: | | | | | | | |
| Trademarks and other | 8,480 | | | — | | | 8,463 | | | — | |
| Total | $ | 49,224 | | | $ | (17,379) | | | $ | 48,899 | | | $ | (15,456) | |
We also completed our annual indefinite-lived intangible assets impairment testing using a qualitative approach as of October 1, 2025 and determined that no adjustments to the carrying value of these assets were necessary.
Amortization of intangible assets was $2.1 billion, $2.2 billion, and $2.1 billion in 2025, 2024, and 2023, respectively. The following is the expected amortization of intangible assets for 2026 through 2030:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (dollars in millions) | 2026 | | 2027 | | 2028 | | 2029 | | 2030 |
| Amortization expense | $1,992 | | $1,896 | | $1,795 | | $1,637 | | $1,628 |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.