This excerpt taken from the IBM 8-K filed Aug 3, 2007.
The company accounts for business combinations using the purchase method of accounting and accordingly, the assets and liabilities of the acquired entities are recorded at their estimated fair values at the date of acquisition. Goodwill represents the excess of the purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. The company does not amortize the goodwill balance. Substantially all of the companys goodwill is not deductible for tax purposes. The primary drivers that generate goodwill are the value of synergies between the acquired entities and the company and the acquired assembled workforce, neither of which qualifies as an identifiable intangible asset. Identifiable intangible assets with finite lives are amortized over their useful lives. See note C, Acquisition/Divestitures on pages 20 to 25 and note I, Intangible Assets Including Goodwill, on pages 27 and 28, for additional information. The results of operations of the acquired businesses were included in the companys Consolidated Financial Statements from the respective dates of acquisition.