Notes to Consolidated Financial Statements Consequently, there has not been sufficient opportunity for the long-term operations to recover the value implicit in goodwill at the initial date of acquisition. During 2011 and 2010, we did not record any significant impairments to the carrying value of goodwill or indefinite-lived intangible assets. Intangible assets consist of service portfolios, patents, trademarks/tradenames, customer relationships and other intangible assets including a collaboration asset established in connection with the restructuring of IAE International Aero Engines AG (IAE) as dis- cussed further in Note 2. Also included within other intangible assets are commercial aerospace payments made to secure certain con- tractual rights to provide product on new aircraft platforms. Pay- ments made on these contractual commitments are to be amortized as the related OEM and Aftermarket units are delivered. Useful lives of finite-lived intangible assets are estimated based upon the nature of the intangible asset and the industry in which the intangible asset is used. These intangible assets are amor- tized based on the pattern in which the economic benefits of the intangible assets are consumed. For both our commercial aero- space collaboration assets and exclusivity arrangements, the pattern of economic benefit generally results in lower amortization during the development period with increasing amortization as programs enter full rate production and aftermarket cycles. If a pattern of economic benefit cannot be reliably determined, a straight-line amortization method is used. The range of estimated useful lives is as follows: Collaboration asset 30 years Customer relationships and related programs 2 to 32 years Purchased service contracts 5 to 30 years Patents & trademarks 3 to 40 years Exclusivity assets 3 to 25 years Other Long-Lived Assets. We evaluate the potential impairment of other long-lived assets when appropriate. If the carry- ing value of other long-lived assets exceeds the sum of the undis- counted expected future cash flows, the carrying value is written down to fair value. During the years ended December 31, 2012 and 2011, we had certain non-recurring fair value measurements result- ing in impairment charges of $168 million and $66 million, respectively. See Note 14. Additionally, in 2012 we recorded pre- tax net asset impairment charges of approximately $179 million related to UTC Power in discontinued operations. The impairment charge at UTC Power results from the disposition of the business before the benefits of technology investments were fully realized. Income Taxes. In the ordinary course of business there is inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowl- edge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sus- tained, no tax benefit has been recognized in the financial state- ments. Where applicable, associated interest expense has also been recognized. We recognize accrued interest related to unrecognized tax benefits in interest expense. Penalties, if incurred, would be recognized as a component of income tax expense. Revenue Recognition. Sales under government and commercial fixed-price contracts and government fixed-price- incentive contracts are recorded at the time deliveries are made or, in some cases, on a percentage-of-completion basis. Sales under cost-reimbursement contracts are recorded as work is performed. Sales for elevators, escalators, installation and modernization con- tracts are accounted for under the percentage-of-completion method. Losses, if any, on long-term contracts are provided for when anticipated. Loss provisions on original equipment contracts are recognized to the extent that estimated inventoriable manu- facturing, engineering, product warranty and product performance guarantee costs, as appropriate, exceed the projected revenue from the products contemplated under the contractual arrange- ment. For new commitments, we generally record loss provisions at the earlier of contract announcement or contract signing except for certain requirements contracts under which losses are recorded upon receipt of the purchase order. For existing commitments, anticipated losses on contracts are recognized in the period in which losses become evident. Products contemplated under con- tractual arrangement include products purchased under contract and, in the large commercial engine and wheels and brakes busi- nesses, future highly probable sales of replacement parts required by regulation that are expected to be purchased subsequently for incorporation into the original equipment. Revenue projections used in determining contract loss provisions are based upon estimates of the quantity, pricing and timing of future product deliveries. Losses are generally recognized on shipment to the extent that inventoriable manufacturing costs, estimated warranty costs and product performance guarantee costs, as appropriate, exceed revenue realized. Contract accounting requires estimates of future costs over the performance period of the contract as well as esti- mates of award fees and other sources of revenue. These estimates are subject to change and result in adjustments to margins on con- tracts in progress. The extent of progress toward completion on our long-term commercial aerospace equipment and helicopter con- tracts is measured using units of delivery. In addition, we use the cost-to-cost method for elevator and escalator sales, installation and modernization contracts in the commercial businesses. For long-term aftermarket contracts, revenue is recognized over the contract period in proportion to the costs expected to be incurred in performing services under the contract. We review our cost esti- 2012 ANNUAL REPORT 63