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Question
What is meant by ‘Mortgage Debentures’?
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Solution
Mortgaged Debentures are those which are secured either on particular assets of the Company called a fixed charge or on all assets of the Company in general, called a floating charge. These are also known as secured debentures. Holders may recover their money from mortgaged assets if the company fails to repay the debentures on time. First mortgage debentures claim the assets charged first, whereas second mortgage debentures claim them second. In India, debentures must be secured.
RELATED QUESTIONS
Explain the different types of debentures?
Jay Kay Ltd. an ‘other listed company’ issued 60,000 12% debentures of Rs. 100 each at par redeemable at the end of 5 years at a premium of 20%. On this date, a balance of Rs. 5,00,000 in the securities premium reserve account. The company created the required amount of debenture redemption reserve in 3 equal instalments on March 31, 2017, 2018 and 2019. It invested in specified securities (DRI) the required amount on April, 01 of the financial year Debentures were duly redeemed on the record necessary journal entries for:
- Issue of debentures
- Writing off loss on issue of debentures.
- Interest and debentures for 2015-16 assuring if are paid annually & tax deducted at service is 10%.
- Regarding redemption of debentures.
