Doubts related to debenture

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Q1 ABCD ltd. issued 10,000, 9% debenture of Rs100 each at a discount of 10%, which will be redeemed after 5 years at a premium of 10%. Calculate the discount on loss of issue of debenture to be written off each year.{ pls provide solution}

Q2 Morsent Ltd. issued 15% debenture of Rs100 each at a premium of 10% which are redeemable after 10 years at a premium of 20%. The discount of loss on redemption of debenture to be written off every year is :{pls provide solution}

Q3 Ram Ltd. purchased a car from Harish Ltd. for 10,00,000 and th consideration was paid by issuing debenture of Rs 10 each at a premium of Rs 2.5 each. Calculate the amount to be credited to debenture account.{pls provide solution}

Q4. ABC. Ltd purchased a machinery from Microtee Ltd. for Rs 50,00,000 and the consideration was paid by issuing debenture of Rs 100 each at at a discount of 20%. Calculate the amount to be credited to debenture account.{pls provide solution}

Q5. T Ltd. has issued 15% Debenture of Rs 20,00,000 at a discount of 10% on April 01,2004 and the company pays interest half-yearly on june 30 and December 31 every year. On March 31,2006,the amount shown as  "interest accrued but not due" in the Balance sheet will be:{pls provide solution}

I am having doubt with these problems.

Thank you for helping.

Replies (1)

 . ,

Total discount on Issue = 10,000 X 100 X 10% = Rs. 1,00,000

Since Debentures are redeemable in lumpsum after 5 years, hence the discount will be written of in 5 years.

Discount to be written off each year = Total Discount / period = 1,00,000/5

Rs. 20,000.

2.

Number of debentures issued is missing.

but the solution will be same as above. The entire loss (discount + premium on redemption) will be written off in equal instalments during the life of debentures.

3.

Number of debentures to be issued

Purchase Consideration / Issue Price.

10,00,000/12.5 = 80,000 debentures

Amount to be credited to debenture account Rs. 80,000 x 10 = Rs. 8,00,000.

4.

Same as above

Number of debentures to be issued = 50,00,000/80 = 62,500 debentures.

Amount to be credited to debenture account Rs. 62,50,000.

5.

Interest Accrued but not due from January 1, 2006 to March 31, 2006 i.e., for 3 months.

20,00,000 x 15% X 3/12 = Rs.75,000.


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