Question

Assertion (A): Discount or Loss on Issue of Debentures is written off in the year debentures are allotted.

Reason (R): Discount or Loss on Issue of Debentures is written off in the year debentures are allotted from Securities Premium (if it exists) and/or from Statement of Profit & Loss as finance cost.

In the context of above two statements, which of the below options is correct?

Options

• Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

• Assertion (A) is incorrect but Reason (R) is correct.

• Both Assertion (A) and Reason (R) are incorrect.

Answer 1

Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).