x-purchasing company
y-selling company
please explain e how to deal in this case?
the issue of such as amount of fully paid 14% debentures in x ltd at 96% as s sufficient to discharge 12% debentures in y ltd at a premium of 20%
what 96% is saying? please solve this
means debentures are discounted at @ 96%
96% means there is a discount of 4 questions........................further to solve this question amounts are required
Here 96% means that 14% debentures in Company 'X' will be issued at 4% discount.
Let 12% debentures in 'Y' Ltd.(Rs.100 each) = Rs.120000
and Let 14% debentures in 'X' ltd. are also have FV = Rs.100 per debenture.
then total amount to be discharged will be (Rs.120000+20% premium) = Rs.144000
Company 'X' will issue 14% debentures at Rs.96 and no. of debentures to be issued will be 1500. (144000/96)
Thus this 4% discount ultimately increasing no. of debentures.
agree with amit's reply... 14% debentures are issued at 96% of its face value (ie, 4% discount) to settle 120% of the face value of 12% debentures... the solution will be the no of debentures eventually used to settle the no of the debentures in the other company.
CAclubindia
