The table below presents other assets by type.

Property, leasehold improvements and equipment

Identifiable intangible assets

Operating lease

right-of-use

assets

Income

tax-related

assets

Miscellaneous receivables and other

Property, Leasehold Improvements and Equipment

Property, leasehold improvements and equipment is net of accumulated depreciation and amortization of $10.12 billion as of December 2020 and $9.95 billion as of December 2019. Property, leasehold improvements and equipment included $6.54 billion as of December 2020 and $6.16 billion as of December 2019 that the firm uses in connection with its operations, and $318 million as of December 2020 and $521 million as of December 2019 of foreclosed real estate primarily related to distressed loans that were purchased by the firm. The remainder is held by investment entities, including VIEs, consolidated by the firm. Substantially all property and equipment is depreciated on a straight-line basis over the useful life of the asset. Leasehold improvements are amortized on a straight-line basis over the shorter of the useful life of the improvement or the term of the lease. Capitalized costs of software developed or obtained for internal use are amortized on a straight-line basis over three years.

The firm tests property, leasehold improvements and equipment for impairment when events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. To the extent the carrying value of an asset or asset group exceeds the projected undiscounted cash flows expected to result from the use and eventual disposal of the asset or asset group, the firm determines the asset or asset group is impaired and records an impairment equal to the difference between the estimated fair value and the carrying value of the asset or asset group. In addition, the firm will recognize an impairment prior to the sale of an asset or asset group if the carrying value of the asset or asset group exceeds its estimated fair value.

During 2020, there were $171 million of impairments, primarily relating to properties held by the firm’s investment entities. There were no material impairments during 2019 or 2018.

Goodwill is the cost of acquired companies in excess of the fair value of net assets, including identifiable intangible assets, at the acquisition date.

The table below presents the carrying value of goodwill by reporting unit.

Consumer & Wealth Management:

In the table above, the increase in goodwill in Equities from December 2019 to December 2020 reflects the acquisition of Folio Financial, Inc. during 2020.

Goodwill is assessed for impairment annually in the fourth quarter or more frequently if events occur or circumstances change that indicate an impairment may exist. When assessing goodwill for impairment, first, a qualitative assessment can be made to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its estimated carrying value. If the results of the qualitative assessment are not conclusive, a quantitative goodwill test is performed. Alternatively, a quantitative goodwill test can be performed without performing a qualitative assessment.

The quantitative goodwill test compares the estimated fair value of each reporting unit with its estimated net book value (including goodwill and identifiable intangible assets). If the reporting unit’s estimated fair value exceeds its estimated net book value, goodwill is not impaired. An impairment is recognized if the estimated fair value of a reporting unit is less than its estimated net book value.

To estimate the fair value of each reporting unit, other than Consumer banking, a relative value technique is used because the firm believes market participants would use this technique to value these reporting units. The relative value technique applies observable

price-to-earnings

multiples or

price-to-book

multiples of comparable competitors to reporting units’ net earnings or net book value. To estimate the fair value of Consumer banking, a discounted cash flow valuation approach is used because the firm believes market participants would use this technique to value that reporting unit given its early stage of development. The estimated net carrying value of each reporting unit reflects an allocation of total shareholders’ equity and represents the estimated amount of total shareholders’ equity required to support the activities of the reporting unit under currently applicable regulatory capital requirements.

During 2020, the outbreak of the COVID-19 pandemic broadly impacted the operating environment. Uncertainty about the COVID-19 pandemic and its continued impact persisted throughout the year. As a result, the firm performed a qualitative assessment in each of the first, second and third quarters of 2020 with respect to each of the firm’s reporting units to determine whether it was more likely than not that the estimated fair value of any of these reporting units was less than its estimated carrying value. Based on these qualitative assessments, the firm determined that it was more likely than not that the estimated fair value of each of the reporting units exceeded its respective estimated carrying value, and that the impact of the COVID-19 pandemic, in each quarter, was not a triggering event to perform a quantitative test.

In the fourth quarter of 2020, the firm performed its annual assessment of goodwill for impairment, for each of its reporting units, by performing a qualitative assessment. Multiple factors were assessed with respect to each of the firm’s reporting units to determine whether it was more likely than not that the estimated fair value of any of these reporting units was less than its estimated carrying value. The qualitative assessment also considered changes since the quantitative test performed in the fourth quarter of 2019.

The firm considered the following factors in the qualitative annual assessment when evaluating whether it was more likely than not that the estimated fair value of a reporting unit was less than its estimated carrying value:

Performance Indicators.

During 2020, the firm’s net revenues, diluted earnings per common share (EPS), return on average common shareholders’ equity (ROE) and book value per common share all increased compared with 2019. The firm’s operating expenses increased, primarily reflecting significantly higher net provisions for litigation and regulatory proceedings and higher compensation and benefits expenses (reflecting improved financial performance). Despite the increase in expenses, the efficiency ratio (total operating expenses divided by total net revenues) improved compared with 2019 and the pre-tax margin remained stable. In addition, with the exception of net provisions for litigation and regulatory proceedings, there were no significant changes to the firm’s overall cost structure since the prior quantitative goodwill test was performed.

•

Macroeconomic Indicators.

The impact of the

COVID-19

pandemic caused a sharp contraction in economic activity in early 2020. However, intervention by central banks and governments, which undertook significant monetary and fiscal policy actions, allowed the global economy to make progress towards recovery during the second half of 2020. The global economy is expected to continue to recover in 2021 and beyond, although there remains significant uncertainty related to the impact and duration of the COVID-19 pandemic.

•

Firm and Industry Events.

Aside from the impact of the COVID-19 pandemic on the firm and its peers’ operating environment, there were no events, entity-specific or otherwise, that would have had a significant negative impact on the valuation of the firm’s reporting units.

•

Fair Value Indicators.

Since the 2019 quantitative goodwill test, fair value indicators in the market generally declined as of the third quarter of 2020, as global equity prices were lower, credit spreads were wider, and the firm and its peers’ stock prices and price-to-book multiples were lower. However, in the fourth quarter of 2020, the improving global economic outlook, investor sentiment and positive developments for COVID-19 vaccines resulted in higher global equity prices and tighter credit spreads compared to the levels at the end of 2019. Similarly, the firm’s stock price and price-to-book multiple ended the year higher compared with the end of 2019.

As a result of the qualitative assessment, the firm determined that it was more likely than not that the estimated fair value of each of the reporting units exceeded its respective estimated carrying value. Therefore, the firm determined that goodwill for each reporting unit was not impaired and that a quantitative goodwill test was not required.

Identifiable Intangible Assets

The table below presents identifiable intangible assets by reporting unit and type.



	As of December

$ in millions		2020		2019
By Reporting Unit
Global Markets:
FICC		$ 2		$ 3
Equities		45		–
Asset Management		274		265
Consumer & Wealth Management:
Consumer banking		6		7
Wealth management		303		366
Total		$ 630		$ 641
By Type
Customer lists
Gross carrying value		$ 1,478		$ 1,427
Accumulated amortization		(1,089	)	(1,044	)
Net carrying value		389		383
Acquired leases and other
Gross carrying value		710		790
Accumulated amortization		(469	)	(532	)
Net carrying value		241		258
Total gross carrying value		2,188		2,217
Total accumulated amortization		(1,558	)	(1,576	)
Total net carrying value		$ 630		$ 641

The firm acquired $155 million of intangible assets during 2020, primarily related to acquired leases and customer lists, with a weighted average amortization period of 10 years. The firm acquired $515 million of intangible assets during 2019, primarily related to customer lists, with a weighted average amortization period of 10 years.

Substantially all of the firm’s identifiable intangible assets have finite useful lives and are amortized over their estimated useful lives generally using the straight-line method.

The tables below present information about the amortization of identifiable intangible assets.



	Year Ended December

$ in millions		2020	2019	2018
Amortization		$147	$173	$152



$ in millions			As of December 2020
Estimated future amortization
2021			$111
2022			$ 94
2023			$ 84
2024			$ 68
2025			$ 49

The firm tests intangible assets for impairment when events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. To the extent the carrying value of an asset or asset group exceeds the projected undiscounted cash flows expected to result from the use and eventual disposal of the asset or asset group, the firm determines the asset or asset group is impaired and records an impairment equal to the difference between the estimated fair value and the carrying value of the asset or asset group. In addition, the firm will recognize an impairment prior to the sale of an asset or asset group if the carrying value of the asset or asset group exceeds its estimated fair value. There were no material impairments during 2020, 2019 or 2018.

Operating Lease

Right-of-Use

Assets

The firm enters into operating leases for real estate, office equipment and other assets, substantially all of which are used in connection with its operations. For leases longer than one year, the firm recognizes a

right-of-use

asset representing the right to use the underlying asset for the lease term, and a lease liability representing the liability to make payments. The lease term is generally determined based on the contractual maturity of the lease. For leases where the firm has the option to terminate or extend the lease, an assessment of the likelihood of exercising the option is incorporated into the determination of the lease term. Such assessment is initially performed at the inception of the lease and is updated if events occur that impact the original assessment.

An operating lease

right-of-use

asset is initially determined based on the operating lease liability, adjusted for initial direct costs, lease incentives and amounts paid at or prior to lease commencement. This amount is then amortized over the lease term. The firm recognized $182 million for 2020 and $963 million (primarily related to the firm’s new European headquarters in London) for 2019 of

right-of-use

assets and operating lease liabilities in

non-cash

transactions for leases entered into or assumed. See Note 15 for information about operating lease liabilities.

For leases where the firm will derive no economic benefit from leased space that it has vacated or where the firm has shortened the term of a lease when space is no longer needed, the firm will record an impairment or accelerated amortization of

right-of-use

assets. There were no material impairments or accelerated amortizations during 2020 and 2019. See Note 3 for further information about ASU No. 2016-02 which was adopted in January 2019.

Miscellaneous Receivables and Other

Miscellaneous receivables and other included:

•

Investments in qualified affordable housing projects of $678 million as of December 2020 and $606 million as of December 2019.

•

Assets classified as held for sale of $437 million as of December 2020 and $470 million as of December 2019 related to the firm’s consolidated investments within the Asset Management segment, substantially all of which consisted of property and equipment.