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Question
On 1st June, 2025, R Energy Ltd. issued 10,000, 7% Debentures of ₹ 100 each at a discount of 10% redeemable at a premium of 10% at the end of five years. All the debentures were subscribed and allotment was made.
Prepare the Balance Sheet (extract) as at 31st March, 2026.
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Solution
| Particulars | Note No. | Amount (₹) |
|---|---|---|
| EQUITY AND LIABILITIES | ||
| Non-Current Liabilities | ||
| Long-term Borrowings | 1 | 10,00,000 |
| Other Non-current Liabilities | 2 | 1,00,000 |
| ASSETS | ||
| Non-Current Assets | ||
| Other Non-current Assets | 3 | 1,66,667 |
| Particulars | Amount (₹) |
|---|---|
| Long-term Borrowings: | |
| 10,000, 7% Debentures of ₹100 each | 10,00,000 |
| Other Non-current Liabilities: | |
| Premium on Redemption of Debentures | 1,00,000 |
| Other Non-current Assets: | |
| Loss on Issue of Debentures ₹ 2,00,000 Less: Written off ₹ 33,333 | 1,66,667 |
Working Note:
Face value of Debentures:
10,000 × ₹ 100 = ₹ 10,00,000
Discount on Issue:
₹ 10,00,000 × 10% = ₹ 1,00,000
Premium on Redemption:
₹ 10,00,000 × 10% = ₹ 1,00,000
Total Loss on Issue:
₹ 1,00,000 + ₹ 1,00,000 = ₹ 2,00,000
Annual amount to be written off:
₹ 2,00,000 ÷ 5 = ₹ 40,000
For 10 months, from 1st June 2025 to 31st March 2026:
₹ 40,000 × `10/12` = ₹ 33,333
Unwritten Loss on Issue:
₹ 2,00,000 − ₹ 33,333 = ₹ 1,66,667
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