Microsoft Corporation Annual Report 2005
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NOTES TO FINANCIAL STATEMENTS

NOTE 9    INTANGIBLE ASSETS

The components of finite-lived intangible assets are as follows:

(In millions)
June 30 2004   2005
  Gross
carrying
amount
spacer Accumulated
amortization
spacer Net carrying
amount
spacer Gross
carrying
amount
spacer Accumulated
amortization
spacer Net carrying
amount
Contract-based $0,908   $(476)   $432   $0,957   $(606)   $351
Technology-based 278   (183)   95   309   (200)   109
Marketing-related 35   (19)   16   35   (25)   10
Customer-related 30   (4)   26   40   (11)   29
    Total $1,251   $(682)   $569   $1,341   $(842)   $499

During fiscal year 2004, we recorded additions to intangible assets of $355 million, of which $266 million was related to a comprehensive intellectual property license that we received in conjunction with the settlement of InterTrust v. Microsoft. During fiscal year 2005, we recorded additions to finite-lived intangible assets of approximately $90 million. No other material intangibles were acquired in fiscal year 2004. We estimate that we have no significant residual value related to our finite-lived intangible assets. The components of finite-lived intangible assets acquired during fiscal years 2004 and 2005 are as follows:

(In millions)
Year Ended June 30 2004   2005
  Amount spacer Weighted
average life
spacer Amount spacer Weighted
average life
 
Contract-based $324   9 years   $16   6 years
Technology-based 28   4 years   64   5 years
Customer-related 3   3 years   10   5 years
Marketing-related      
    Total $355       $90    

Acquired finite-lived intangibles are generally amortized on a straight-line basis over weighted average periods. Intangible assets amortization expense was $170 million for fiscal year 2004 and $161 million for fiscal year 2005. The estimated future amortization expense related to intangible assets as of June 30, 2005 is as follows:

(In millions)
Year Ended June 30 Amount
spacer
2006 $123
2007 99
2008 81
2009 50
2010 39
    Total $392
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