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QUESTION

On 01/01/2014, Company Big (B) acquired 25% of Company Small (S)'s shares.

1.    On 01/01/2014, Company Big (B) acquired 25% of Company Small (S)'s shares. To acquire the shares, B borrowed $ 4,000,000 from bank, paid another 1,000,000 cash out of their own bank account, and issued 100,000 shares to the former shareholders of S. The shares issued have $50 market value per share and $1 face value. In 2015, S made a net profit of $4,000,000, announced and gave out 1,000,000 cash dividend. The share price of S were $15 per share at 01/01/2014 and $18 per share at 12/31/2014.

a.     For the transaction happened on 01/01/2014, please write down the journal entries for B

b.      For the transaction happened on 01/01/2014, please write down the journal entries for S

c.

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