F ltd purchased machinery from G company for a book value of 4,00,000.The consideration was paid by issue of 10%
debenture of Rs 100 each at a discount of 20% . the dbnture acc cr vth?
a)400000
b)500000
c)320000
d)480000
pls xplain vth ans......
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Doubt in debenture
Replies (4)
issue of debenture on discount means you will receive 20% less than the face value of debentures in the given case as the debentures are issued as consideration for machinery so I presumed 80,000 is paid in cash. So accounting entries will be : Machinery account Dr 400,000 Discount on issue of Deb Dr 80,000 Debentures account Cr 400,000 Cash account Cr 80,000.
The entry is
Fixed Asset A/c Dr 400000
Discount on debentures A/c dr 100000
To debentures A/c 500000
how you calculate discount./ pls xplain...
4,00,000 is payable. Issue price is Rs. 80 (assuming face value 100)
No. of deb. To be issued =400000/80=5000
disc dr. 5000*20=100000
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