Question : Discount on issue of debenture is a
Option 1: Capital loss to be written off over the tenure of the debentures
Option 2: Revenue loss to be charged in the year of issue
Option 3: Capital loss to be written off from Capital Reserve
Option 4: Capital loss to be shown as goodwill
Correct Answer: Capital loss to be written off over the tenure of the debentures
Solution : According to ICAI standards, the discount on the issuance of debentures represents a capital loss that must be charged to the "Securities Premium Account" over the tenure of a debenture. The discount on the issuance of debentures may be written off by debiting either the securities premium account or the profit and loss account.
Hence the correct answer is option 1.
Question : ‘Discount on issue’ is a ………….. and will be ----------- during the life time of the debentures. But till then it will be shown as --------------’ on the Assets side of the Balance Sheet.
Question :
Intel Ltd. issued 10,000, 7% Debentures of Rs. 100 each at a discount of 10%. It has Securities Premium Reserve of Rs.1,50,000.Discount on Issue of Debentures, i.e., Rs. 1,00,000 will be written off by passing the following
Question : Premium on issue of debentures can be used for ________.
Citizen Ltd. issued 10,000, 6% Debentures of Rs. 100 each at a discount of 10% redeemable at 10% premium. It has Securities Premium Reserve of Rs. 1,75,000. Loss on Issue of Debentures Rs. 2,00,000 will be written off by
Question : On 1st April 2018, X Ltd. issued 20,000, 10% Debentures of Rs.100 each at a discount of 5% redeemable at a premium of 4% after 5 years. It is decided to write off the loss on the issue of debentures in the year ended 31st March 2019. It has the following balances :
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile