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Question
Which of the following is not a characteristic of Bearer Debentures?
Options
They are treated as negotiable instruments.
Their transfer requires a deed of transfer.
They are transferable by mere delivery.
The interest on it is paid to the holder irrespective of identity.
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Solution
Their transfer requires a deed of transfer.
Explanation:
Transferring bearer debentures does not necessitate the use of a deed of transfer. These debentures can be transferred simply by delivering them.
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RELATED QUESTIONS
What is meant by ‘Issue of debenture at discount and redeemable at premium’?
What is meant by an ‘Irredeemable Debenture’?
Long Answer Question
Explain the different terms for the issue of debentures with reference to their redemption.
Raj Ltd . issued 5,000; 8% Debentures of ₹ 100 each at a premium of 5% payable as follows:
₹ 10 on application ; ₹ 20 along with premium on allotment and balance on first and final call.
Pass necessary Journal entries.
Alka Ltd . issued 5,000, 10% Debentures of ₹ 1,000 each at a discount of 10% redeemable at a premium of 5% after 5 years . According to the terms of issue ₹ 500 was payable on application and the balance amount on allotment of debentures. Record necessary entries regarding issue of 10% Debentures.
On 1st April, 2017, Solar Power Ltd. issued 10,000, 8% Debentures of ₹ 100 each at a discount of 5% redeemable at a premium of 15% at the end of five years. All the debentures were subscribed and allotment was made. The company had balance in Securities Premium Reserve of ₹ 80,000.
Prepare the Balance Sheet (extract) as at 31st March, 2018.
Assertion (A): Debentures saves income tax.
Reason (R): Interest on debenture is tax deductible expenditure.
Which of the following is false with respect to debentures ?
A company can issue debentures:
X Ltd. purchased assets of ₹ 18,00,000 and took over liabilities of ₹ 6,00,000 of Y Ltd. for a purchase consideration of ₹ 10,00,000. The payment to Y Ltd. was made by issue of 9% debentures of ₹ 100 each at ₹ 125. Calculate the number of 9% debentures issued in favour of Y Ltd. and pass the necessary journal entries for the above transactions in the books of X Ltd.
