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प्रश्न
What is meant by ‘Premium on Redemption of Debentures’?
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उत्तर
When the debentures are redeemed at a price more than their face value or par value, then it is said that the debentures are redeemed at a premium. The difference between the redeemed price and the par value is regarded as a capital loss, and this loss is written off till the redemption of the debentures. The Premium on Redemption of Debenture is shown in the Notes to Accounts under the sub-head of ‘Other Long-term Liabilities’. The final balance is shown under the main head of ‘Non-Current Liabilities’ on the Equity and Liabilities side of the Company’s Balance Sheet.
Accounting Treatment for Premium on Redemption of Debentures:
- At the time of the Issue of the debenture:
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Bank/Debenture Allotment A/c |
Dr. |
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Loss on Issue of Debenture A/c |
Dr. |
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To Debenture A/c |
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To Premium on Redemption |
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(Debenture issued with the term of redemption at a premium) |
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- At the time of Redemption of Debentures:
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Debenture A/c |
Dr. |
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Premium on Redemption A/c |
Dr. |
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To Debentureholder A/c |
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(Amount of debentures due to debentureholders) |
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संबंधित प्रश्न
What is meant by the redemption of debentures by conversion?
What is meant by the redemption of debentures by “Purchase in the Open Market”?
Differentiate between redemption of debentures out of capital and out of profits.
What is meant by the conversion of debentures? Describe the method of such a conversion.
X.Ltd. purchased a Machinery from Y. Ltd. at an agreed purchase consideration of Rs. 4,40,000 to be satisfied by the issue of 12% debentures of Rs. 100 each at a premium of Rs 10 per debenture. Journalise the transactions.
What journal entries will be made in the following cases when company redeems debentures at the expiry of period by serving the notice: (a) when debentures were issued at par with a condition to redeem them at premium; (b) when debentures were issued at premium with a condition to redeem that at par; and (c) when debentures were issued at discount with a condition to redeem them at premium?
Krishna Ltd. had outstanding 20,000, 9% debentures of ₹ 100 each on 1st April 2014. These debentures were redeemable at a premium of 10% in two equal installments starting from 31st March 2018. The company had a balance of ₹ 4,00,000 in Debenture Redemption Reserve on 31st March 2017. Pass necessary journal entries for the redemption of debentures in the books of Krishna Ltd. for the year ended 31st March 2018.
Which of the methods can be adopted to write off discount/loss on issue of debentures against the revenue profits?
Which of the following methods are there for redemption of debentures?
Give the necessary journal entries at time of redemption of debentures
"X Ltd. issued 500, 9% debentures of Rs.100 each at par and redeemable at par at the end of 5 years out of capital."
No Debenture Redemption Reserve is required for debentures issued by ______.
Shashi Ltd. decided to redeem its 8,000, 11% Debentures of ₹ 100 each at a premium of 10%. The minimum amount transferred to Debenture Redemption Reserve will be: (assume that the company is not listed)
According to SEBI guidelines, what percentage of the amount of debentures must be transferred to Debenture Redemption Reserve, before the commencement of redemption of debentures, in the case of convertible debentures?
If debentures purchased in the open market are not immediately cancelled, they are treated as:
Debentures can be redeemed out of:
Which of the following is not true about Debenture Redemption Reserve (DRR)?
Premium on Redemption of Debentures Account is a ______.
What is the nature of Premium on Redemption of Debenture Account?
