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Question
When debentures are issued at a discount and are redeemable at a premium, which of the following accounts is debited at the time of issue?
Options
Debentures account
Premium on redemption of debentures account
Loss on issue of debentures account.
None of the above
MCQ
Solution
Loss on issue of debentures account.
Explanation:
The discount/loss on debenture issuance is a capital loss or fictitious asset that must be written down during the life of the debentures. The amount of discount/loss on debenture issues should typically not be written off in the year of the issue because the benefit of the debentures accrues to the company until they are redeemed.
shaalaa.com
Issue of Debentures
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