Question

Ajanta Ltd. issued 10% Debentures of ₹ 8,00,000 on 1st April, 2019 which are redeemable in five equal yearly instalments starting from 1st April, 2022. How would this information be presented in the Balance Sheet as at 31st March, 2021.

Options

• ₹ 8,00,000 as Long term borrowings.

• ₹ 8,00,000 as Other Non-current liability.

• ₹ 8,00,000 as Current liability.

• ₹ 1,60,000 as other Current liability and ₹ 6,40,000 as Long term borrowing.

Answer 1

₹ 1,60,000 as other Current liability and ₹ 6,40,000 as Long term borrowing.

Explanation:

Total debentures: ₹ 8,00,000

Redeemable in 5 equal annual instalments, so each instalment

= `(₹ 8,00,000)/5 `

= ₹ 1,60,000

As of 31st March, 2021, the first instalment is due within 12 months (on 1st April, 2022),

so ₹ 1,60,000 is shown as Current Liability, and the balance ₹ 6,40,000 as Long-Term Borrowing.