Problem in accounting entry of redeeming debentures

 

Balance Sheet of X Ltd. [Extract] as at 31.03.2012

Liabilities Rs.
12% Debentures 1,00,000

Adjustment :-

The issue of such an amount of fully paid 14% debentures in Y Ltd. at 96% as is sufficient to discharge 12% Debentures in X Ltd. at a Premium of 20% . 

What should be the Treatment and Journal Entry ???

[ Source : CA. Dr. PC Tulsian CA IPCC Groupt 1 Accounting Book (2012) , Chapter 5 Amalgamtion Illustration no.5 point no. (c), pg no. 5.22  ]

Replies (6)

Hi Rohit,

What is the difficulty in this problem.. It fairly simple.. Let me explain :

1) You have to discharge 12% debenture of Rs. 1,00,000 at 20% premium by way of 14% debentures issued at 96%. (i.e. 4% discount)

2) so, 100000+ 20% = 1,20,000 /96% = Rs 1,25,000.  This means you issued Rs 1,25,000 debentures to discharge the liability of Rs 1,20,000 debentures.

3) so entry is : 12% debenture in X ltd   - Dr.                       1,20,000

                           Discount on issue of debentures - Dr.            5,000

                                  To 14% Debentures in Y Ltd.                                                 1,25,000

 

Thanks 

Yash

Ernst and Young

But accoring to the book Answer is Rs. 1,00,000 ...

 

i.e 12% Debtures     Dr. 1,00,000

                              To 14% Debentures              100,000

Hi Rohit,

I think you are not reading it correctly... Check page 5.24 , 4th Journal entry...

 

Thanks

Yash

OK So you have Same Book :D

 

I was asking for Journal Entry in the Books of PRARTHANA Ltd. [ here written as X Ltd. ] ......

Rohit,

In books of Prathana Ltd., the entry would only be with book values as it is getting absorbed by Piyush Ltd.

Evertything will be transfered to realisation account

 

12% Debentures A/c  -Dr.     1,00,000

          To Realisation A/c                                  1,00,000

 

Thanks

Yash

OK ...

Thanks for your response

Can You please tell me on [ pg. no. 5.8 ,5.9 & 5.10 ]

 

Are following answers correct ???

-> Case II     Cash for fraction [ 0.55 * Rs. 100 = 55 ] , It should be 0.55* Rs.55 = 30 because 55(10+45) is market value of share ....

-> Similar problem in Case III , Case IV , Case V , Case XI 

-> In Case XII Market Value should ne Rs.15 and not Rs. 55 ....

-> Similar Problem in Case XIII

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
ARTICLESHIP 26 August 2026
CA Article Assistant/CA Drop Out/Accounts Executive

PARV & Co.

New Delhi

CA Inter

View Details
Company
28 August 2026
Assistant Manager

NRS AND ASSOCIATES

Kozhikode

CA Inter

View Details
Company
ARTICLESHIP 17 August 2026
CA Article Trainee

ASC Group

Noida

CA Inter

View Details
Company
ARTICLESHIP 29 August 2026
Article Assistant

RRPM & ASSOCIATES LLP

Chennai

CA Inter

View Details
Company
ARTICLESHIP 25 August 2026
CA Article's

Saini Pati Shah & Co LLP

Mumbai

CA Inter

View Details
Company
21 August 2026
Accountant

A G International

Kolkata

B.Com

View Details
Company
25 August 2026
Senior Accountant

MG Associates

New Delhi

CA Inter

View Details
Company
09 September 2026
Chartered Accountant

Aviv Global Private Limited

Ahmedabad

CA

View Details