Advertisements
Advertisements
Question
Select most appropriate alternative from those given below :
The issue of debentures more than face value is called___________.
Options
at par
at discount
at premium
none of these
Advertisements
Solution
The issue of debentures more than face value is called at premium.
Explanation: When debentures are issued at a price more than their face value, it is known as ‘issue of debentures at a premium’. Such a premium is credited to the Securities Premium Account.
APPEARS IN
RELATED QUESTIONS
The issue of debenture more than the face value is termed as an issue of debenture at par.
From the following Statement of Profit and Loss of Navratan Ltd. for the year ended 31st March, 2013, prepare a Comparative Statement of Profit and Loss:
| Particulars | Note No. | 2012 – 13 Rs |
2011 – 12 Rs |
| Revenue from operations | 8,05,000 | 6,14,000 | |
| Other Incomes | 43,000 | 51,000 | |
| Expenses | 5,59,000 | 4,88,000 |
Rate of income tax was 40%.
Shakti Ltd. decided to redeem its 750, 12% Debentures of Rs 100 each. The company purchased 500 Debentures at Rs 94 per Debenture from the open market. The remaining debentures were redeemed out of profits. The company had already made a provision for Debenture Redemption Reserve in its books.
Pass necessary Journal Entries in the books of the company for the above transactions.
Pass the necessary Journal entries of the issues and redemption of Debentures in the following cases:
(i) 10,000, 10% Debentures of Rs 120 each issued at 5% premium, repayable at par.
(ii) 20,000, 9% Debentures of Rs 200 each issued at 20% premium, repayable at 30% premium.
On 1st April, 2008 a company made an issue of Rs 2,00,000, 6% Debentures of Rs 100 each, repayable at a premium of 10%. The terms of issue provided for the redemption of 400 debentures every year starting from the end of 31-3-2010 either by purchase from the open market or by draw of lots at the company’s option.
On 31-3-2010, the company purchased for cancellation 300 debentures at 95% and 100 debentures at 90%.
Pass the necessary Journal entries for the issue and redemption of debentures assuming that the company had already created the
Debentures Redemption Reserve A/c by the require amount.
Pass necessary Journal entries for the following transaction in the books of Fortune Ltd:
(i) Redeemed Rs 96,000, 12% Debenture by conversion into Equity Shares of Rs 100 each. The
Equity Shares were issued at a discount 4%.
(ii) Converted 4,800, 12% Debentures of Rs 100 each into New 13% Debentures of Rs 100 each.
The new Debentures were issued at a premium 25%.
Answer in a sentence only.
What is meant by ‘Premium on Redemption of debentures?
Write one word/term/phrase which can substitute the following
The issue of debentures more than face value of debentures
State to whether the following statement is True/False.
The issue of debentures less than face value of debenture to termed as issue of debentures at discount.
State to whether the following statement is True/False.
The issue of debenture more than face value is termed on issue of debentures at par.
Tanagi Ltd. issued Rs 10,000 12% debentures of Rs 100 each at a discount of 5% Payable as follows:
On Application Rs 40
On Allotment Rs 55
Show journal entries assuming that all the installments were duly collected. Also show the relevant portion of the balance sheet.
Amar Ltd. purchased assets of the book value of Rs 99,000 from Abhi Ltd. It was agreed that purchase consideration to be paid by issuing 11% Debentures of Rs 100 each Assume debentures have been issued.
1. At par
2. At Discount of 10% and
3. At Premium of 10%
Record necessary journal entries
Hero Ltd. purchased plant and machinery for ₹ 18,00,000 from Pearl Machines Ltd. payable ₹ 3,00,000 by drawing a promissory note and the balance by the issue of 9% debentures of ₹ 100 each at a premium of 20%.
Pass the necessary journal entries in the books of Hero Ltd. for the above transactions.
On 1st April, 2012, Neptune Finance Company (a listed NBFC) issued 4,000, 9% Debentures of ₹ 100 each to be redeemed at a premium of 5% on 31st March, 2021.
You are required to pass necessary journal entries for the issue and redemption of debentures.
Suhas Ltd. issued 1,000, 7% Debentures of ₹ 100 each to be redeemed after three years at a premium of 5%. The face value of the debentures was payable as:
₹ 20 on Application
₹ 30 on Allotment (on 1st May, 2020)
₹ 30 on First call (on 1st October, 2020)
₹ 20 on Final call (on 1st January, 2021)
All the debentures were applied and allotted.
Ali, to whom 20 debentures were allotted, paid the allotment money and the two calls on 31st March, 2021. The Articles of Association of the company provided for interest on calls-in-arrear to be charged @ 10% per annum, which Ali paid on 31st March, 2021.
You are required to pass journal entries in the books of Suhas Ltd. to record:
- The adjustment and receipt of interest on calls in arrears
- The entry to close the interest on calls in arrears account
Pass necessary journal entries for the issue of debentures in the following cases:
- Issued 50,000, 9% debentures of ₹ 100 each at par redeemable at par.
- Issued 10,000, 8% debentures of ₹ 100 each at 7% premium redeemable at par.
- Issued 750, 8% debentures of ₹ 100 each at 10% discount redeemable at par.
- Issued 1,000, 9% debentures of ₹ 100 each at 5% premium redeemable at 8% premium.
- Issued 500, 9% debentures of ₹ 100 each at 10% discount redeemable at 10% premium.
Which of the following statement is incorrect with respect to debentures?
'Vimal Ltd. purchased assets a worth ₹ 5,00,000 and took over liabilities of ₹ 1,00,000 of Kapil Ltd. for a purchase consideration of ₹ 4,50,000. Vimal Ltd. paid one third of the amount of cheque and balance was settled by issuing 11% debentures of 100 each at a premium of 20%.
Pass necessary journal entries in the books of Vimal Ltd. for the above transactions.
During the year 2021-22 SM Ltd. issued 10,000, 10% Debentures of ₹ 100 each at a discount of 10% to be redeemed after three years. The company had a balance of ₹ 60,000 in its Securities Premium Reserve.
What amount will be added under Operating Activities as Discount on Issue of Debentures written off in the Cash Flow Statement of SM Ltd. for the year 2021-22?
The following balances have been extracted from the books of Nirvana Ltd, as at 31st March, 2024:
| Particulars | (₹) | Particulars | (₹) |
| Security deposit for electricity for ten years | 30,000 | Uncalled amount on partly paid-up shares | 8,00,000 |
| Underwriting commission | 20,000 | 10% Debentures | 5,00,000 |
| General Reserve | 70,000 | Statement of P/L (Dr.) | 10,000 |
| Fixed Deposits | 2,00,000 | Calls-in arrears @ ₹ 1 per share | 40,000 |
| Premium on redemption of Debentures | 20,000 | Securities Premium | 2,00,000 |
| Equity Share Capital (1,00,000 shares of ₹ 10 each) |
10,00,000 |
You are required to show the above items in Notes to Accounts accompanying the Balance Sheet of Nirvana Ltd. prepared as per Schedule III of the Companies Act 2013 as at 31st March, 2024.
