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Goodwill and Intangible Assets Accounting Policy

Goodwill

Goodwill represents the excess of the purchase price of an acquired entity over the fair value of net assets acquired. Accenture reviews the recoverability of goodwill by reportable operating segment annually, or more frequently when indicators of impairment exist. Based on the results of its annual impairment analysis, Accenture determined that no impairment existed as of August 31, 2017 or 2016, as each reportable operating segment's estimated fair value substantially exceeded its carrying value.

Source: Accenture PLC, Annual Report

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Goodwill and Intangible Assets Disclosure

Accenture PLC, Statement of Financial Position, Goodwill and Intangible Assets

USD $ in thousands

 
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
Customer-related
Technology
Patents
Other
Definite-lived intangible assets, gross carrying amount
Accumulated amortization
Definite-lived intangible assets, net carrying amount
Goodwill
Goodwill and intangible assets

Source: Based on data from Accenture PLC Annual Reports

Item Description The company
Definite-lived intangible assets, net carrying amount Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Accenture PLC's definite-lived intangible assets, net carrying amount increased from 2015 to 2016 and from 2016 to 2017.
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. Accenture PLC's goodwill increased from 2015 to 2016 and from 2016 to 2017.
Goodwill and intangible assets Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Accenture PLC's goodwill and intangible assets increased from 2015 to 2016 and from 2016 to 2017.

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Analyst Adjustments: Removal of Goodwill

Accenture PLC, adjustments to financial data

USD $ in thousands

 
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
Adjustment to Total Assets
Total assets (as reported)
Less: Goodwill
Total assets (adjusted)
Adjustment to Total Accenture Plc Shareholders' Equity
Total Accenture plc shareholders' equity (as reported)
Less: Goodwill
Total Accenture plc shareholders' equity (adjusted)

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Adjusted Ratios: Removal of Goodwill (Summary)

Accenture PLC, adjusted ratios

 
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE % % % % % %
Adjusted ROE % % % % % %
Return on Assets (ROA)
Reported ROA % % % % % %
Adjusted ROA % % % % % %
Ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Accenture PLC's adjusted total asset turnover deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017.
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.
Accenture PLC's adjusted financial leverage declined from 2015 to 2016 but then slightly increased from 2016 to 2017.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders' equity. Accenture PLC's adjusted ROE improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Accenture PLC's adjusted ROA improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

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Adjusted Total Asset Turnover

 
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
As Reported
Revenues before reimbursements (Net revenues) (USD $ in thousands)
Total assets (USD $ in thousands)
Total asset turnover1
Adjusted for Goodwill
Revenues before reimbursements (Net revenues) (USD $ in thousands)
Adjusted total assets (USD $ in thousands)
Adjusted total asset turnover2

2017 Calculations

1 Total asset turnover = Revenues before reimbursements (Net revenues) ÷ Total assets
= ÷ =

2 Adjusted total asset turnover = Revenues before reimbursements (Net revenues) ÷ Adjusted total assets
= ÷ =

Ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Accenture PLC's adjusted total asset turnover deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017.

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Adjusted Financial Leverage

 
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
As Reported
Total assets (USD $ in thousands)
Total Accenture plc shareholders' equity (USD $ in thousands)
Financial leverage1
Adjusted for Goodwill
Adjusted total assets (USD $ in thousands)
Adjusted total Accenture plc shareholders' equity (USD $ in thousands)
Adjusted financial leverage2

2017 Calculations

1 Financial leverage = Total assets ÷ Total Accenture plc shareholders' equity
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Accenture plc shareholders' equity
= ÷ =

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.
Accenture PLC's adjusted financial leverage declined from 2015 to 2016 but then slightly increased from 2016 to 2017.

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Adjusted Return on Equity (ROE)

 
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
As Reported
Net income attributable to Accenture plc (USD $ in thousands)
Total Accenture plc shareholders' equity (USD $ in thousands)
ROE1 % % % % % %
Adjusted for Goodwill
Net income attributable to Accenture plc (USD $ in thousands)
Adjusted total Accenture plc shareholders' equity (USD $ in thousands)
Adjusted ROE2 % % % % % %

2017 Calculations

1 ROE = 100 × Net income attributable to Accenture plc ÷ Total Accenture plc shareholders' equity
= 100 × ÷ = %

2 Adjusted ROE = 100 × Net income attributable to Accenture plc ÷ Adjusted total Accenture plc shareholders' equity
= 100 × ÷ = %

Ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders' equity. Accenture PLC's adjusted ROE improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

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Adjusted Return on Assets (ROA)

 
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
As Reported
Net income attributable to Accenture plc (USD $ in thousands)
Total assets (USD $ in thousands)
ROA1 % % % % % %
Adjusted for Goodwill
Net income attributable to Accenture plc (USD $ in thousands)
Adjusted total assets (USD $ in thousands)
Adjusted ROA2 % % % % % %

2017 Calculations

1 ROA = 100 × Net income attributable to Accenture plc ÷ Total assets
= 100 × ÷ = %

2 Adjusted ROA = 100 × Net income attributable to Accenture plc ÷ Adjusted total assets
= 100 × ÷ = %

Ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Accenture PLC's adjusted ROA improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

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