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Question
State to whether the following statement is True/False.
Premium on issue of debentures is recorded on the asset side of balance sheet.
Options
True
False
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Solution
False
Explanation: The premium received on the issue of debentures represents the excess amount received over and above the face value of the debentures. It is a capital gain for the company. Therefore, it is shown on the Liabilities side of the Balance Sheet under the head "Reserves & Surplus".
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| Particulars | (₹) | Particulars | (₹) |
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| Underwriting commission | 20,000 | 10% Debentures | 5,00,000 |
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10,00,000 |
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