Question

Sky Ltd. took loan of ₹ 4,00,000 from Next Bank for which the company placed 10% Debentures of ₹ 4,50,000 as collateral security with the bank. It also purchased a machine for ₹ 2,70,000 and paid the vendors issuing 3,000, 8% Debentures of ₹ 100 each. What will be total amount of Long-term borrowings in the company's Balance Sheet?

विकल्प

• ₹ 7,50,000

• ₹ 7,00,000

• ₹ 8,50,000

• ₹ 11,50,000

Answer 1

₹ 7,00,000

Explanation:

Bank loan of ₹ 4,00,000 is a long-term borrowing. Debentures of ₹ 4,50,000 given as collateral security are not added separately because they only secure the loan.

Debentures issued to vendor:

3,000 × ₹ 100 = ₹ 3,00,000

Therefore,

₹ 4,00,000 + ₹ 3,00,000 = ₹ 7,00,000​