Question

When debentures are issued at a discount and are redeemable at a premium, which of the following accounts is debited at the time of issue?

पर्याय

• Debentures account

• Premium on redemption of debentures account

• Loss on issue of debentures account.

• None of the above

Answer 1

Loss on issue of debentures account.

Explanation:

The discount/loss on debenture issuance is a capital loss or fictitious asset that must be written down during the life of the debentures. The amount of discount/loss on debenture issues should typically not be written off in the year of the issue because the benefit of the debentures accrues to the company until they are redeemed.