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प्रश्न
What is meant by the redemption of debentures by “Purchase in the Open Market”?
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उत्तर
According to the Company Act, if a company is authorised by its Articles of Association, only then may it purchase its own debentures from the open market. The main purpose of such a purchase is as follows:
- For immediate cancellation of debenture liability, if the interest rate on its debenture is higher than the market rate of interest.
- A company may also purchase its own debentures with the motive of investment and sell them at a higher price in future and thereby earn profit.
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संबंधित प्रश्न
What is meant by ‘Premium on Redemption of Debentures’?
What is meant by the redemption of debentures by conversion?
Short Answer Question
Under which head is the ‘Debenture Redemption Reserve’ shown in the Balance Sheet?
Differentiate between redemption of debentures out of capital and out of profits.
Describe the steps for creating a sinking fund for the redemption of debentures.
What is meant by the conversion of debentures? Describe the method of such a conversion.
A company issued debentures of the face value of Rs 5,00,000 at a discount of 6% on April 01, 2012. These debentures are redeemable by annual drawings of Rs,1,00,000 made on March 31 each year. The directors decided to write off discount based on the debentures outstanding each year.
Calculate the amount of discount to be written-off each year. Give journal entries also.
A company issued 10% Debentures of the face value of Rs,1,20,000 at a discount of 6% on April 01, 2011. The debentures are payable by annual drawings of Rs 40,000 commencing from the end of third year.
How will you deal with discount on debentures?
Show the discount on debentures account in the company ledger for the period of duration of debentures. Assume accounts are closed on March 31 every year.
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?
Which of the methods can be adopted to write off discount/loss on issue of debentures against the revenue profits?
Which of the following column indicated in the statement given below is to be debited?
"Purchase of own debentures by the company for cancellation" ·
Consider the following statements.
Statement 1 - "No DRR is required for debentures issued by All India Financial Institutions, regulated by RBI and Banking Companies for both public as well as privately placed debentures".
Statement 2 - DRR is required for debentures issued by All India Financial Institutions, regulated by RBI and Banking Companies for both public as well as privately placed debentures"
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:
Which of the following is not true about Debenture Redemption Reserve (DRR)?
Premium on Redemption of Debentures Account is a ______ Account.
Premium on redemption of debentures is generally provided at the time of ______.
What is the nature of Premium on Redemption of Debenture Account?
