Question

Paratigm Ltd. issued ₹ 40,000, 10% Debentures of ₹ 100 each at a discount of 5%, redeemable at a premium. On issue of these debentures 'Loss on Issue of Debentures Account' was debited with ₹ 4,00,000. The amount of premium on redemption of debentures was

Options

• ₹ 4,00,000.

• ₹ 2,00,000.

• ₹ 4,40,000.

• ₹ 20,000.

Answer 1

₹ 2,00,000.

Explanation:

Face value = 40,000 × ₹ 100 = ₹ 40,00,000

Discount @ 5% = ₹ 2,00,000

Loss on Issue = ₹ 4,00,000

Therefore, Premium on Redemption = ₹ 4,00,000 − ₹ 2,00,000 = ₹ 2,00,000.