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What is Discount on Issue of Debentures? - Accountancy

Short Note

Short Answer Question

What is discount on issue of debentures?

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Solution

When the debentures are issued at a price below its par value or face value, then it is said that the debentures are issued at discount. The difference between the issue price and the face value of the debenture is regarded as a capital loss.
As per the Revised Schedule VI of the Companies Act, Discount on Issue of Debentures is shown in the Notes to Accounts:

1. With the amount that is to be written off within 12 months from the date of Balance Sheet - Shown under Other Current Assets

2. With the amount that is to be written off after 12 months from the date of Balance Sheet - Shown under Other Non-Current Assets

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APPEARS IN

NCERT Class 12 Accountancy - Company Accounts and Analysis of Financial Statements
Chapter 2 Issue and Redemption of Debentures
Short Answer Question | Q 10 | Page 135
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