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Question
State whether the following statement is True (T) or False (F):
Premium on redemption of debentures account is shown under the ‘Securities Premium’ in the balance sheet.
True or False
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Solution
This statement is false.
Explanation:
“Premium on Redemption” is a long-term liability (a future obligation to pay), whereas “Securities Premium” is part of the company’s reserves and surplus (retained profits). Therefore, Premium on Redemption cannot be shown under Securities Premium; it is presented under Non-Current Liabilities in the balance sheet.
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