Question : On 1st Nov. 2018, VIVO lLtd. issued 40,000, 10% Debentures of Rs.100 each at a discount of 5%, redeemable at par after four years. The debentures were fully subscribed. It has a balance of Rs.80,000 in Capital Reserve and Rs.1,50,000 in Securities Premium Reserve which the company decided to use for writing off the discount on issue of debentures.
Question:- Statement of profit and loss account will be debited by ________.
Option 1: Rs. 1,50,000
Option 2: Rs. 2,00,000
Option 3: Rs. 1,20,000
Option 4: None of the above
Correct Answer: None of the above
Solution : Answer = None of the above
None of the above is the final answer because discounts on debentures should be written off firstly from securities premium and then surplus or statement of profit and loss account.
Hence, the correct option is 4.
