Company: DHR
Filing Date: 2025-07-22
Form Type: 10-Q
Source: 0000313616-25-000153
Chunk: 57

Company: DANAHER CORP /DE/
Filing Date: 2025-07-22
Form: 10-Q
Item: Item 1
Chunk 57
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CRITICAL ACCOUNTING ESTIMATES

The Company is supplementing the critical accounting estimates as described in the 2024 Annual Report with the following critical accounting estimate.  There have been no other material changes to the Company’s critical accounting estimates as described in the 2024 Annual Report. 

Acquired intangibles - The Company reviews identified intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.  Determining whether an impairment loss occurred for finite-lived intangibles requires a comparison of the carrying amount of the asset group to the sum of undiscounted cash flows expected to be generated by the asset group.  These analyses require management to make judgments and estimates about future revenues, expenses, market conditions and discount rates related to these assets.  Indefinite-lived intangibles are subject to impairment testing at least annually or more frequently if events or changes in circumstances indicate that potential impairment exists.  Determining whether an impairment loss occurred for indefinite-lived intangible assets involves calculating the fair value of the indefinite-lived intangible assets and comparing the fair value to their carrying value.  In addition, the Company reviews the useful lives for intangible assets and whether events or changes in circumstances indicate that an indefinite life may no longer be appropriate.  If the fair value is less than the carrying value, the difference is recorded as an impairment loss.  If actual results are not consistent with management’s 

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estimates and assumptions, goodwill and other intangible assets may be overstated, and a charge would need to be taken against net earnings which would adversely affect the Company’s financial statements.  

The Company estimates the fair value of acquired trade names through the use of a relief from royalty method, which values an indefinite-lived intangible asset by estimating the royalties saved through the ownership of an asset.  Under this method, an owner of an indefinite-lived intangible asset determines the arm’s length royalty that likely would have been charged if the owner had to license the asset from a third-party.  The royalty rate, which is based on the estimated rate applied against forecasted sales, is tax-effected and discounted to present value using a discount rate commensurate with the relative risk of achieving the cash flow attributable to the asset.  Management judgment is necessary to determine key assumptions, including revenue growth rates, perpetual revenue growth rates, royalty rates and discount rates.  As further described in Note 8 to the accompanying Consolidated Condensed Financial Statements, in connection with the decision to re