Intangible assets mainly refer to the fair value of existing customer contractual relationships attributable to an acquired business and patents and licenses which are being amortized over their respective lives. The fair value of intangible assets typically is determined, as of the date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-tax earnings and cash flows (including cash flows for working capital) arising from backlog and follow-on sales to the customer over their estimated lives, including the probability of expected future contract renewals and sales, less a contributory assets charge, all of which is discounted to present value.

All intangible assets are being amortized over their estimated useful lives, as indicated below, with no estimated residual values. Intangible assets consists of the following:


	December 31, 2025						December 31, 2024
(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Acquired intangible assets	$	1,087	$	(984)	$	103	$	1,087	$	(962)	$	125
Patents and licenses	18		(9)		9		14		(7)		7
Total intangible assets	$	1,105	$	(993)	$	112	$	1,101	$	(969)	$	132

Amortization expense related to acquired intangible assets was $22 million, $22 million, and $22 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Acquired intangible assets are amortized on a straight-line basis over their estimated useful lives of 10 to 15 years. The net acquired intangible asset balances consists primarily of technology related intangibles of $72 million and customer related assets of $31 million as of December 31, 2025. Patents and licenses are amortized on a straight-line basis over their estimated useful lives of 5 to 10 years. The estimated annual amortization expense related to intangible assets for the subsequent five years is as follows: