Question

Harsh Ltd. issued 1,00,000, 8% Debentures of ₹ 100 each at certain rate of premium and to be redeemed at 10% premium. At the time of writing off Loss on Issue of Debentures, Statement of Profit & Loss was debited with ₹ 4,00,000. At what rate of premium, these debentures were issued?

Options

• 10%

• 16%

• 6%

• 4%

Answer 1

6%

Explanation:

Premium on redemption = ₹ 1,00,00,000 × 10% = ₹ 10,00,000.

Since ₹ 4,00,000 is charged to Statement of Profit & Loss, ₹ 6,00,000 is adjusted against Securities Premium.

Therefore, issue premium rate = `(₹6,00,000)/(₹1,00,00,000) × 100 = 6%`.