Question

State whether the following statement is True (T) or False (F):

Debentures cannot be issued at a premium and redeemable at par.

Answer 1

This statement is false.

Explanation:

A company can easily issue debentures at a premium (above face value) and redeem them at par (at face value). This is a very common commercial practice where the premium collected at the time of issue is recorded as a capital profit in the Securities Premium Account.