Note 16 Goodwill and Other Intangible Assets

At year-end 2006, five out of seven segments carry goodwill, of which Industrial Holdings has less than 1% of the total balance. Business Banking Switzerland and Corporate Center carry no goodwill. For the purpose of testing goodwill for impairment, UBS determines the recoverable amount of its segments on the basis of value in use.

The recoverable amount is determined using a proprietary model based on the discounted cash flow method, which has been adapted to give effect to the special features of the banking business and its regulatory environment. The recoverable amount is determined by estimating streams of earnings available to shareholders in the next four quarters based on a rolling forecast process, discounted to their present values. The terminal value reflecting all periods beyond the first year is calculated on the basis of the estimated individual return on equity for each segment, which is derived from the forecast first-year profit, the underlying equity, the cost of equity and the long-term growth rate. The recoverable amount of the segments is the sum of earnings available to shareholders from the first year and the terminal value. The model is most sensitive to changes in the forecast earnings available to shareholders in year one, the estimated return on equity, the underlying equity, the cost of equity and to changes in the long-term growth rate. The applied long-term growth rate is based on long-term risk free interest rates. Earnings available to shareholders are estimated based on forecast results, business initiatives and planned capital investments and returns to shareholders. Validation parameters used within the Group's impairment test model are linked to external market information, where applicable. Discount rates applied range from 8% for Wealth Management International & Switzerland and for Business Banking Switzerland to 10.5% for Investment Bank.

Management believes that reasonable changes in key assumptions used to determine the recoverable amounts of segments will not result in an impairment situation.

	Goodwill	Other intangible assets
CHF million	Total	Infrastructure	Customer relationships, contractual rights and other	Total	31.12.06	31.12.05
Historical cost
Balance at the beginning of the year	11,313	1,016	2,056	3,072	14,385	13,096
Additions and reallocations	2,015	0	1,321	1,321	3,336	92
Disposals	(142)	0	(1,231)	(1,231)	(1,373)	(395)
Write-offs ¹	0	0	(28)	(28)	(28)	(112)
Foreign currency translation	(722)	(74)	(31)	(105)	(827)	1,704
Balance at the end of the year	12,464	942	2,087	3,029	15,493	14,385
Accumulated amortization
Balance at the beginning of the year		263	636	899	899	895
Amortization ²		48	148	196	196	340
Reallocations		0	0	0	0	(307)
Disposals		0	(301)	(301)	(301)	(30)
Write-offs ¹		0	(28)	(28)	(28)	(112)
Foreign currency translation		(20)	(26)	(46)	(46)	113
Balance at the end of the year		291	429	720	720	899
Net book value at the end of the year	12,464	651	1,658	2,309	14,773	13,486
1 Represents write-offs of fully amortized other intangible assets. 2 Amortization expense of CHF 43 million and CHF 209 million is related to discontinued operations for 2006 and 2005, respectively.

The following table presents the disclosure of goodwill and other intangible assets by business segment for the year ended 31 December 2006.
CHF million	Balance at the beginning of the year	Additions and reallocations	Disposals	Amortization	Foreign currency translation	Balance at the end of the year
Goodwill
Wealth Management International & Switzerland	1,566	116	0		(37)	1,645
Wealth Management US	3,841	444	0		(279)	4,006
Business Banking Switzerland	0	0	0		0	0
Global Asset Management	1,438	190	0		(97)	1,531
Investment Bank	4,309	1,260	0		(307)	5,262
Corporate Center	0	0	0		0	0
Industrial Holdings	159	5	(142)		(2)	20
UBS	11,313	2,015	(142)		(722)	12,464
Other intangible assets
Wealth Management International & Switzerland	141	184	0	(10)	10	325
Wealth Management US	753	148	0	(53)	(55)	793
Business Banking Switzerland	0	0	0	0	0	0
Global Asset Management	8	488	0	(4)	6	498
Investment Bank	296	483	0	(72)	(19)	688
Corporate Center	9	0	0	(9)	0	0
Industrial Holdings	966	18	(930)	(48)	(1)	5
UBS	2,173	1,321	(930)	(196)	(59)	2,309

The estimated, aggregated amortization expenses for other intangible assets are as follows:
CHF million	Other intangible assets
Estimated, aggregated amortization expenses for:
2007	334
2008	238
2009	238
2010	219
2011	187
2012 and thereafter	1,093
Total	2,309