Company: SNPS
Filing Date: 2025-12-22
Form Type: 10-K
Source: 0000883241-25-000028
Chunk: 3

Company: SYNOPSYS INC
Filing Date: 2025-12-22
Form: 10-K
Item: Item 8
Chunk 3
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 underlying customer agreements and evaluating the Company’s assessment of the contractual terms and conditions in accordance with revenue recognition requirements. For a selection of software and IP license contracts with customers entered during the year, we inquired of personnel outside of the accounting function to corroborate our understanding of certain terms and conditions.

Evaluation of the acquisition-date fair value of certain intangible assets acquired in a business combination

As described in Note 4 to the consolidated financial statements, the Company completed the acquisition of Ansys for aggregate purchase consideration of approximately $34.9 billion on July 17, 2025. The Company accounted for the acquisition using the acquisition method of accounting that requires allocation of the fair value of the purchase consideration to assets acquired (including identified intangible assets) and liabilities assumed 

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at their estimated fair value on the acquisition date. The fair values of certain acquired intangible assets were determined using the relief-from-royalty method and the multi-period excess earnings method. The Company recorded estimated intangible assets attributable to the transaction of $13.0 billion, which included core/developed technologies, customer relationships, and trademarks and trade names with acquisition-date fair values of $6,500,000 thousand, $5,100,000 thousand, and $950,000 thousand, respectively.

We identified the evaluation of the acquisition-date fair value of the core/developed technologies, customer relationships, and trademarks and trade names intangible assets as a critical audit matter. Subjective and complex auditor judgment was required to evaluate certain key assumptions used in the measurement of acquisition-date fair values, including the determination of royalty rates, projected revenue and discount rate. Changes to those key assumptions could have had a significant effect on the determination of the fair value of the intangible assets. In addition, specialized skills and knowledge were needed to evaluate such assumptions.  

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition process. This included controls over the development and selection of the key assumptions used in the valuation of the acquired intangible assets. We performed sensitivity analyses over the key assumptions to assess the impact of changes in those assumptions on the Company’s determination of the acquisition-date fair values. We evaluated the reasonableness of projected revenue by comparing the information underlying this assumption to industry benchmarks, recent market data or historical results of the acquired business. In addition, we involved valuation professionals with specialized skills and knowledge who assisted in:

•evaluating the Company’s royalty rates by