ISSUE OF DEBENTURES

Debenture premium can be used to :

• (a) Write off the discount on issue of shares or debentures

• (b) Write off the premium on redemption of shares or debentures

• (c) Write off capital loss

• (d) All of the above

A company issued ₹ 1,00,000 12% debentures of ₹ 100 each. The amount of interest on debentures will be:

• (a) ₹ 12,000

• (b) ₹ 1,20,000

• (c) ₹ 12,00,000

• (d) None of these

When debentures are issued as collateral security, which entry has to be passed ?

• (a) Debenture Suspense A/c Dr. To Debentures

• (b) No entry has to be made

• (c) (a) or (b)

• (d) None of these

F Ltd. purchased machinery for a book value of ₹ 4,00,000. The consideration was paid by issue of 10% Debentures of ₹ 100 each at a discount of 20%. The Debenture Account will be credited by :

• (a) ₹ 4,00,000

• (b) ₹ 5,00,000

• (c) ₹ 3,20,000

• (d) ₹ 4,80,000

Discount on issue of Debentures should be written off:

• (a) Out of Securities Premium Account

• (b) Out of Capital Profits

• (c) Out of Statements of Profit and Loss

• (d) In the above order over the period of debentures

Discount on issue of Debentures is in the nature of:

• (a) Revenue Loss

• (b) Capital Loss

• (c) Deferred Revenue Expenditure

• (d) None of there

If debentures of ₹ 4,50,000 are issued for the consideration of net assets of ₹ 5,00,000 balance ₹ 50,000 will be credited to:

• (a) Profit & Loss A/c

• (b) Goodwill A/c

• (c) General Reserve A/c

• (d) Capital Reserve A/c

Deep Ltd. issue 10,00,000, 7 % debentures of 100 Rs. each at a discount of 4%, redeemable after 5 years at a premium of 6%. Loss issue of debentures is :

• (a) ₹ 10,00,000

• (b) ₹ 6,00,000

• (c) ₹ 16,00,000

• (d) ₹ 4,00,000