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Redemption Of debentures

Rahul Shinde (13 Points)

19 August 2018

In Which cases DRR is Equated to value of redemption & transferred to General reserve ? & why ?

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5 Replies

Dilpreet Singh Chadha (169 Points)
Replied 19 August 2018

When redemption is done by investing in sinking fund method than
After redemption whatever be the b.f. on the debit or credit side of sinking FUND ACCT is transferred to general reserve acct

Shashank Srivastav (40 Points)
Replied 20 August 2018

When debentures are redeemed out of realization of accumulated amount of DRR Investment, then the balance in DRR, which comes equal to the value of redemption, is transferred to General Reserve. The DRR is equated by transferring the profit or loss on DRR Investment to the DRR. This is so because as per Companies Act, Debentures should be redeemed out of profits of the company. General Reserve is accumulated profits. Although DRR is also created out of profits but it contains investment also.