Read the following information carefully and answer the question. A Limited took over assets of ₹3,00,000 and liabilities of ₹10,000 from X and Co. Ltd. for an agreed purchase consideration of ₹2,70,000 to be satisfied by the issue of 10% debentures of ₹100 each at a premium of 20%. The company also took a loan of ₹10,00,000 from Punjab National Bank and issued 10% debentures of ₹12,00,000 of ₹100 each as collateral security. The rate of interest on the loan is 12% per annum.
‘Discount on issue of debenture’, which is to be written off under one operating cycle is shown under:
Other Current Assets
Discount on issue of debentures is an expense and is shown as Other Current Assets in financial statements.
Important Questions from Accounting for Debentures
When debentures are issued at a premium and redeemed at a premium, the journal entry will have the following combination:
(A) Discount on issue of debentures account is credited
(B) Loss on issue of debentures account is debited
(C) Security premium account is credited
(D) Premium on redemption of debentures account is credited
Choose the correct answer from the options given below:
Arrange the following in the correct sequence in the context of debenture:
(A) Payment to debenture-holders
(B) Creation of DRR
(C) Issue of debentures
(D) Redemption becomes due
Choose the correct answer from the options given below:
Balance of Debenture Redemption Reserve A/c after the redemption of debenture is credited to:
Calculate the number of Debentures issued by A Ltd. for consideration other than cash:
Which of the following option regarding issue and redemption of debenture is not possible in general?
