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Question
Star Ltd. is a manufacturer of chemical fertilisers. Its annual turnover is ₹ 50 crores. The company had issued 5,000, 12% Debentures of ₹ 500 each at par. Calculate the amount of Debentures Redemption Reserve which needs to be created to meet the requirements of law.
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Solution
Amount required to be transferred to DRR
= 25 % of Face value of Debentures
= 25 % of Rs 2500000
= Rs 625000
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