Question : If the debenture is redeemed at a premium, then premium payable on redemption of debentures is a ____________.
Option 1: Asset Account
Option 2: Liability Account
Option 3: Expense Account
Option 4: Income Account
Correct Answer: Liability Account
Solution : Answer = Liability Account
If the debenture is redeemed at a premium, the premium on redemption of the debenture is the non-current liabilities of the firm. The premium payable on the redemption of debentures represents an obligation of the company to pay an additional amount over the face value of the debentures upon redemption. Since it represents a liability or an obligation, the premium payable on redemption of debentures is classified as a liability account on the balance sheet. Hence, the correct option is 2.
Question : Which of the following statements is false?
Question : If debentures of Rs. 20,000 are issued at par and are redeemable at a premium of 10%, the premium payable is debited to
Question : Home Products Ltd. issued on 1st April, 2019,10,000,9% Debentures of Rs. 100 each at a premium of 10% redeemable at a premium of 5% after 5 years. Issue price was payable along with application. Which of the following statements is correct?
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