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 the issue of debentures.
Question:- Securities premium account will be debited with Rs.________.
Option 1: Rs.1,50,000
Option 2: Rs.1,20,000
Option 3: Rs.80,000
Option 4: Rs.2,00,000
Correct Answer: Rs.1,20,000
Solution : Answer = Rs.1,20,000
According to NCERT capital reserve can be used to write off discounts on the issue of debentures, the answer is Rs. 1,20,000. But if capital reserve can’t be used to write off discounts on the issue of debentures. The reason is capital reserve is used to write off only capital nature losses. Hence, the correct option is 2.
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
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 decided to write off loss on issue of debentures in the year ended 31st March, 2019. It has the following balances : Capital
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