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During the current year, Compton Crate Corporation purchased all of the outstanding common stock of Little Lacy Ltd. (LLL), paying $60 million in cash. Compton recorded the assets acquired as follows:
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.
Stable Company
Refers to a firm with consistent performance, low volatility in its stock price, and predictable financial returns, making it a less risky investment.
Growing Rapidly
A phase characterized by a significant increase in a company's revenue, profits, or size within a short period.
Times Interest Earned
A financial ratio that measures a company's ability to meet its debt obligations based on its operating income.
Return on Stockholders' Equity
A measure of the profitability of a corporation in relation to the equity held by its shareholders, calculated as net income divided by shareholder equity.
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