During the current year, Peterson data Coorporation purchased all of the outstan
ID: 2385810 • Letter: D
Question
During the current year, Peterson data Coorporation purchased all of the outstanding common stock of Junior Jackson Inc. (JJI), paying 36 million dollars in cash. Peterson recoreded the assets acquired as follows:Accounts receivable 2.5 mil
Inventory 9 mil
Property, plant, and equipment 25.5 mil
Goodwill 6 mil
The book value of JJI assets and owners equity before the acquisiotion was 22 million dollars and 18 mil dollars respectively.
Compute the fair value of JJI liabilities that Peterson assumed in the acquisition.
Explanation / Answer
During the current year, Peterson data Coorporation purchased all of the outstanding common stock of Junior Jackson Inc. (JJI), paying 36 million dollars in cash. Peterson recoreded the assets acquired as follows:
Accounts receivable 2.5 mil
Inventory 9 mil
Property, plant, and equipment 25.5 mil
Goodwill 6 mil
The book value of JJI assets and owners equity before the acquisiotion was 22 million dollars and 18 mil dollars respectively.
Compute the fair value of JJI liabilities that Peterson assumed in the acquisition.
Fair value of assets Fair value of liabilities = Cash paid
Therefore, Fair value of liabilities = Fair value of assets
Cash paid = $43 million 36 million = $7 million.
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