Note 7. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the years ended December 31, 2013 and 2012 was as follows (in millions):
| Americas Segment |
EAME Segment |
Asia Pacific Segment |
Vacation Ownership and Residential Segment |
Total | ||||||||||||||||
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Balance at January 1, 2012 |
$ | 786 | $ | 256 | $ | 283 | $ | 151 | $ | 1,476 | ||||||||||
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Acquisitions |
— | 6 | — | — | 6 | |||||||||||||||
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Currency translation adjustment |
— | 3 | — | — | 3 | |||||||||||||||
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Asset dispositions |
(58 | ) | — | — | — | (58 | ) | |||||||||||||
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Other |
— | — | — | — | — | |||||||||||||||
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Balance at December 31, 2012 |
$ | 728 | $ | 265 | $ | 283 | $ | 151 | $ | 1,427 | ||||||||||
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Balance at January 1, 2013 |
$ | 728 | $ | 265 | $ | 283 | $ | 151 | $ | 1,427 | ||||||||||
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Acquisitions |
— | — | — | — | — | |||||||||||||||
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Currency translation adjustment |
(1 | ) | 5 | (1 | ) | — | 3 | |||||||||||||
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Asset dispositions |
(22 | ) | — | — | — | (22 | ) | |||||||||||||
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Other |
— | (1 | ) | — | — | (1 | ) | |||||||||||||
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Balance at December 31, 2013 |
$ | 705 | $ | 269 | $ | 282 | $ | 151 | $ | 1,407 | ||||||||||
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At October 31, 2013, the date of our annual impairment valuation, we evaluated the goodwill of the hotel reporting units and determined that, for each of the hotel reporting units, the fair value significantly exceeded the book value. We used a market approach to determine the fair value of the reporting units. We utilized earnings multiples from various independent, third party investment firms and applied those earnings multiples to the respective earnings streams (owned hotels, management and franchise fees and other) generated by each of our hotel reporting units to determine the fair value for each of the hotel segments.
At October 31, 2013, we determined qualitatively that, for the vacation ownership and residential reporting unit, it was not more likely than not that goodwill was impaired, and thus, the two-step goodwill impairment test was not required. In making this determination, we considered the significant excess of fair value over book value calculated in step one of the 2012 impairment test, trends in the discount rate, favorable trends in our current year operations, favorable 2013 industry performance versus prior year, analyst multiples and other positive qualitative information, all of which indicated that it is more likely than not that the fair value of the reporting unit is greater than its book value. Based on this evaluation of internal and external qualitative factors, we concluded that the two-step goodwill impairment test was not required for the vacation ownership reporting unit.
In 2012, we evaluated the goodwill of the vacation ownership and residential reporting unit and determined that its fair value significantly exceeded its book value. As well, we evaluated the goodwill for the hotel reporting units using the same earnings multiples approach described previously and determined that, for each of the hotel reporting units, the fair value significantly exceeded the book value. In 2012, we concluded no impairment existed for any of our reporting units.
Intangible assets consisted of the following (in millions):
| December 31, | ||||||||
| 2013 | 2012 | |||||||
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Trademarks and trade names |
$ | 316 | $ | 314 | ||||
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Management and franchise agreements |
493 | 456 | ||||||
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Other |
16 | 15 | ||||||
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| 825 | 785 | |||||||
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Accumulated amortization |
(200 | ) | (187 | ) | ||||
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| $ | 625 | $ | 598 | |||||
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The intangible assets related to management and franchise agreements have finite lives, and accordingly, we recorded amortization expense of $28 million, $24 million, and $29 million, respectively, during the years ended December 31, 2013, 2012 and 2011. The other intangible assets noted above have indefinite lives.
Amortization expense relating to intangible assets with finite lives for each of the years ended December 31, is expected to be as follows (in millions):
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2014 |
$ | 28 | ||
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2015 |
27 | |||
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2016 |
25 | |||
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2017 |
24 | |||
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2018 |
23 |