Issue of Debentures 1

Debenture interest is paid:

• based on net profits of the company

• at a predetermined rate

• at variable rate

• none of the above

At the time of issue of debentures, Debentures Account is credited by:

• the amount received

• nominal(face) value

• issue price

• none of the above

Pick the odd one out:

• Issue of debentures to vendors

• Issue of debentures to promotors

• Issue of debentures as collateral security

• Issue of debentures to public

Maira Ltd. took over assets of 20,00,000 and liabilities of ₹4,00,000 of Subav Ltd. for an agreed purchase consideration of 18,00,000. The amount was payable by issue of 11% Debentures of 100 each at 10% discount. The number of debentures issued will be

• 9,000

• 20,000

• 16363.63

• 18,000

Assertion (A): Debenture holders do not enjoy any voting right.

Reason (R): A debenture holder just lends money but does not become an owner of the company with the purchase of debentures.

• (A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

• (B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

• (C) Assertion (A) is true, but Reason (R) is false.

• (D) Assertion (A) is false, but Reason (R) is true.

Assertion (A): Sarita Pvt. Ltd. issued 15% 10,000 debentures at par @ `100 per debenture. The company suffered a loss but still the directors of the company paid interest on debentures.

Reason (R): Interest on debenture is a charge against profits and therefore, its payment is not subject to the earning of profit.

• (A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

• (B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

• (C) Assertion (A) is true, but Reason (R) is false.

• (D) Assertion (A) is false, but Reason (R) is true.

Excess of net assets over purchase consideration at the time of purchase is:

• Credited to capital reserve.

• Debited to Goodwill A/c

• Credited to the General reserve account

• Credited to the Vendors Account.

While issuing ___________, company doesn't give any undertaking for repayment of money borrowed by issuing such debentures.

• Zero coupon rate Debentures

• Non-convertible Debentures

• Secured Debentures

• Non - redeemable Debentures

Manish Ltd. issued 50,000, 8% Debentures of ₹100 each at certain rate of premium and to be redeemed at 10% premium. At the time of writing off Loss on Issue of Debentures, Statement of Profit & Loss was debited with ₹2,00,000. At what rate of premium, these debentures were issued?

• 10%

• 16%

• 6%

• none of the above

Rohit Ltd., issued 2200, 9% debentures of Rs 100 each at Rs 95 per debenture. 9% debentures Account will be credited by:

• 220,000

• 209,000

• 200,000

• none of the above