Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2021

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued and Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes. ASU 2019-12 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2020. The adoption of ASU 2019-12 did not have a material impact on the Company’s condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14—Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”) which improves disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This standard is effective for fiscal years ending after December 15, 2020, for public business entities. Early adoption is permitted for all entities. Entities are to apply the amendments in this update on a retrospective basis for all periods presented. The adoption of ASU 2018-14 did not have a material impact on the Company’s condensed consolidated financial statements.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of the interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the interim condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Business Combinations Policy [Policy Text Block]

Acquisition of SoundChip

In July 2020, the Company completed the acquisition of SoundChip SA, a privately-held Swiss company (“SoundChip”) for an initial purchase price of approximately $15 million (with a portion held in escrow in accordance with the agreement terms), subject to working capital adjustments (the “Initial Purchase Price”) and agreed to pay future contingent cash milestone payments of up to $6 million upon the achievement of certain customer and product sales milestones during the period from July 1, 2020 to December 31, 2022.

The results of operations of SoundChip have been included in the Company’s consolidated financial statements since July 1, 2020. The Company did not provide pro forma disclosure according to ASC 810 for the SoundChip acquisition due to immateriality.

The preliminary purchase price allocation ("PPA") was based on information available at the time of closing of the SoundChip acquisition. During 2021, the Company finalized the PPA for SoundChip as a result of finalizing the working capital adjustments as stated above.

The following table summarizes adjustments since the preliminary PPA was disclosed as of December 31, 2020:

	Preliminary estimated fair value			Adjustments			Fair value
Cash	$	443		$	-		$	443
Property and equipment		456			-			456
Current assets		2,301			-			2,301
Other non-current assets		1,042			-			1,042
Current liabilities		(1,007	)		25			(982	)
Other long-term liabilities		(1,945	)		-			(1,945	)
Net tangible assets acquired		1,290			-			1,315

Deferred tax liability		(1,121	)		-			(1,121	)

Intangible assets:
Developed technology		7,189			-			7,189
Backlog		54			-			54
Customer relationships		678			-			678
Total intangible assets		7,921			-			7,921

Goodwill		6,862			(197	)		6,665

Net assets acquired	$	14,952					$	14,780

DSP GROUP INC /DE/ 10-Q