Question : Loss on issue of Debentures arises when
Option 1: Debentures are issued at par and redeemable at par
Option 2: Debentures are issued at a premium redeemable at par
Option 3: Debentures are issued at premium redeemable at premium
Option 4: All of the above
Answer (1)
20th Jan, 2024
Correct Answer: Debentures are issued at premium redeemable at premium
Solution : Answer = Debentures are issued at a premium and redeemable at a premium
Loss on the issue of debentures occurs when debentures are issued at a premium and are redeemable at a premium. This means the debentures are sold for more than their face value and will be repaid at a higher value, resulting in a loss for the company upon redemption.
Hence, the correct option is 3.
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