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Questions
Give the meaning of ‘Issue of Debentures as a collateral security.’
What is meant by “issue of debentures as collateral security”?
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Solution
Issue of Debentures as collateral security refers to the debentures which are issued without any consideration to the lender or financial institution as security in addition to the primary security.
RELATED QUESTIONS
Give the meaning of 'Debentures issued as Collateral Security'.
Short Answer Question
Can the company purchase its own debentures?
Best Barcode Ltd. took a loan of ₹ 5,00,000 from a bank giving ₹ 6,00,000; 9% Debentures as collateral security. Pass journal entries regarding issue of debentures , if any, and show this loan in the Balance Sheet of the company.
A company took a loan of ₹ 4,00,000 from Bandhan Bank Ltd. and issued 8% Debentures of ₹ 4,00,000 as a collateral security.
X Ltd. took a loan of ₹ 3,00,000 from IDBI Bank . The company issued 4,000; 9% Debentures of ₹ 100 each as a collateral security for the same . Show how these items will be presented in the Balance Sheet of the company.
S. Singh Limited obtained a loan of ₹ 5,00,000 from State Bank of India @ 10% p.a. interest. The company issued ₹ 7,50,000, 10% Debentures of ₹ 100 each in favour of State Bank of India as Collateral Security. Pass necessary Journal entries for the above transactions:
(i) When company decided not to record the issue of 10% Debentures as Collateral Security.
(ii) When company decided to record the issue of 10% Debentures as Collateral Security.
