Double entry question, anyone know???

Kieron

I have recently been invited for a job interview but beforehand was asked some double entry questions in a telephone interview. I think I answered them fairly well but the final question was this and I wasn't sure of the answer....

Company A buys company B for $100,000 - what is the double entry to the accounts for both company A and company B?

I said for Company A that the entry would be CR Bank and DR Captial - would it be shares capital??? If anyone could clarify just so that I know for sure I would appreciate it....

Many thanks

Jellinator

Company A buys company B for $100,000

I'd be asking does Company B have a quoted share price

(Company A) DR Investments (B/Sheet) $100,000 + CR Bank $100,000
(Company DR Bank $100,000 + CR *Source $100,000

*Source can be share capital, share premium or loan accounts depending on ownership