A company has issued deep discount bonds.
The interest payable on them is set off against the general reserve instead of being debited to P&L account.
Is the treatment correct?
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Use of General Reserve
Replies (1)
If it is a listed public limited company, then u cannot set off the interest against general reserve, being the interest are finance charges of company and company has floated these deep discount bonds to incurr capital budgeting excercises or to realise some business benefits. They are debited to p/l a/c to get the tax shield.
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