During the current year, Compton Crate Corporation acquired all of the outstanding common stock of Little Lacy Ltd. (LLL), paying $60 million in cash. Compton recorded the assets acquired as follows: $$\begin{array} { l l }
\text { Accounts receivable } & \$ 5,500,000 \
\text { Inventory } & 18,000,000 \
\text { Property, plant, and equipment } & 45,500,000 \
\text { Goodwill } & 22,000,000
\end{array}$$ The book value of LLL's assets and owners' equity before the acquisition were $50 million and $30 million, respectively.
Required: Compute the fair value of LLL's liabilities that Compton assumed in the acquisition.

Question

During the current year, Compton Crate Corporation acquired all of the outstanding common stock of Little Lacy Ltd. (LLL), paying $60 million in cash. Compton recorded the assets acquired as follows: $$\begin{array} { l l } 
\text { Accounts receivable } & \$ 5,500,000 \
\text { Inventory } & 18,000,000 \
\text { Property, plant, and equipment } & 45,500,000 \
\text { Goodwill } & 22,000,000
\end{array}$$ The book value of LLL's assets and owners' equity before the acquisition were $50 million and $30 million, respectively.
Required: Compute the fair value of LLL's liabilities that Compton assumed in the acquisition.

Quizplus · Accepted Answer

The Answer of During the current year, Compton Crate Corporation acquired all of the outstanding common stock of Little Lacy Ltd. (LLL), paying $60 million in cash. Compton recorded the assets acquired as follows: $$\begin{array} { l l } 
\text { Accounts receivable } & \$ 5,500,000 \
\text { Inventory } & 18,000,000 \
\text { Property, plant, and equipment } & 45,500,000 \
\text { Goodwill } & 22,000,000
\end{array}$$ The book value of LLL's assets and owners' equity before the acquisition were $50 million and $30 million, respectively.
Required: Compute the fair value of LLL's liabilities that Compton assumed in the acquisition.

During the Current Year, Compton Crate Corporation Acquired All of the Outstanding