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प्रश्न
How would you deal with ‘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 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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|
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To Debenture Holder A/c |
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(Amount of debentures due to debenture holders) |
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संबंधित प्रश्न
What is meant by ‘Premium on Redemption of Debentures’?
What is meant by redemption of debentures?
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.
Explain the guidelines of SEBI for creating the Debenture Redemption Reserve.
Describe the steps for creating a sinking fund for the redemption of debentures.
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.
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.
Convertible debentures cannot be issued at a discount if ______.
Profit on cancellation of own debentures is transferred to ______.
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"
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?
Premium on Redemption of Debentures Account is a ______.
What is the nature of Premium on Redemption of Debenture Account?
