Goodwill and Intangible Assets Accounting Policy
Schlumberger records the excess of purchase price over the fair value of the tangible and identifiable intangible assets acquired as goodwill. The goodwill relating to each of Schlumberger's reporting units is tested for impairment annually as well as when an event, or change in circumstances, indicates an impairment may have occurred.
Under generally accepted accounting principles, Schlumberger has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of one of its reporting units is greater than its carrying amount. If, after assessing the totality of events or circumstances, Schlumberger determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then there is no need to perform any further testing. However, if Schlumberger concludes otherwise, then it is required to perform the first step of a two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the goodwill of the reporting unit is less than its carrying value.
Schlumberger has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test.
For purposes of performing the impairment test for goodwill, Schlumberger's four reporting units are the three Groups comprising Oilfield Services: Reservoir Characterization, Drilling and Reservoir Production, as well as the Distribution business segment. Schlumberger elected to perform the qualitative assessment described above for purposes of its annual goodwill impairment test. Based on this assessment, Schlumberger concluded that it was more likely than not that the fair value of each of its reporting units was greater than its carrying amount. Accordingly, no further testing was required.
Intangible assets consist primarily of customer relationships, technology/technical know-how and tradenames acquired in business combinations. Customer relationships are generally amortized over periods ranging from 7 to 28 years, acquired technology/technical know-how are generally amortized over periods ranging from 5 to 18 years and tradenames are generally amortized over periods ranging from 5 years to 30 years.
Source: Schlumberger Ltd., Annual Report
Goodwill and Intangible Assets Disclosure
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Schlumberger Ltd., Statement of Financial Position, Goodwill and Intangible Assets
Source: Based on data from Schlumberger Ltd. Annual Reports
| Item |
Description |
The company |
| Intangible assets, net book value |
Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. |
Schlumberger Ltd.'s intangible assets, net book value increased from 2009 to 2010 but then slightly declined from 2010 to 2011.
|
| Goodwill |
Carrying amount as of the balance sheet date, which is the cumulative amount paid and (if applicable) the fair value of any noncontrolling interest in the acquiree, adjusted for any amortization recognized prior to the adoption of any changes in generally accepted accounting principles (as applicable) and for any impairment charges, in excess of the fair value of net assets acquired in one or more business combination transactions. |
Schlumberger Ltd.'s goodwill increased from 2009 to 2010 and from 2010 to 2011.
|
| Intangible assets and goodwill |
Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. |
Schlumberger Ltd.'s intangible assets and goodwill increased from 2009 to 2010 but then slightly declined from 2010 to 2011.
|
Analyst Adjustments: Removal of Goodwill
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Schlumberger Ltd., adjustments to financial data
Adjusted Ratios: Removal of Goodwill (Summary)
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Schlumberger Ltd., adjusted ratios
| Ratio |
Description |
The company |
| Adjusted total asset turnover |
An activity ratio calculated as total revenue divided by adjusted total assets. |
Schlumberger Ltd.'s adjusted total asset turnover deteriorated from 2009 to 2010 but then improved from 2010 to 2011 exceeding 2009 level.
|
| Adjusted financial leverage |
A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income. |
Schlumberger Ltd.'s adjusted financial leverage increased from 2009 to 2010 and from 2010 to 2011.
|
| Adjusted ROE |
A profitability ratio calculated as net income divided by adjusted shareholders' equity. |
Schlumberger Ltd.'s adjusted ROE improved from 2009 to 2010 and from 2010 to 2011.
|
| Adjusted ROA |
A profitability ratio calculated as net income divided by adjusted total assets. |
Schlumberger Ltd.'s adjusted ROA improved from 2009 to 2010 and from 2010 to 2011.
|
Adjusted Total Asset Turnover
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2011 Calculations
| Ratio |
Description |
The company |
| Adjusted total asset turnover |
An activity ratio calculated as total revenue divided by adjusted total assets. |
Schlumberger Ltd.'s adjusted total asset turnover deteriorated from 2009 to 2010 but then improved from 2010 to 2011 exceeding 2009 level.
|
Adjusted Financial Leverage
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2011 Calculations
| Ratio |
Description |
The company |
| Adjusted financial leverage |
A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income. |
Schlumberger Ltd.'s adjusted financial leverage increased from 2009 to 2010 and from 2010 to 2011.
|
Adjusted Return On Equity (ROE)
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2011 Calculations
| Ratio |
Description |
The company |
| Adjusted ROE |
A profitability ratio calculated as net income divided by adjusted shareholders' equity. |
Schlumberger Ltd.'s adjusted ROE improved from 2009 to 2010 and from 2010 to 2011.
|
Adjusted Return On Assets (ROA)
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2011 Calculations
| Ratio |
Description |
The company |
| Adjusted ROA |
A profitability ratio calculated as net income divided by adjusted total assets. |
Schlumberger Ltd.'s adjusted ROA improved from 2009 to 2010 and from 2010 to 2011.
|
