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

question 145

Essay

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.

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Definitions:

Decreased Perceptual Field

A reduction in the range or scope of sensory awareness and interpretation, often resulting from neurological conditions or sensory impairments.

Proper Authorities

Official organizations or individuals vested with the legal power to enforce laws, regulations, or carry out government functions.

Agitated

A state of increased restlessness, nervousness, or irritability, often resulting from stress or a specific psychiatric condition.

Positive Variance

A term used in accounting and finance indicating that actual revenues are higher than forecasted or budgeted revenues, or expenses are lower than expected.