Question : When an amount that is at least 10 per cent of the nominal (face) value of the outstanding debentures is transferred to Debentures Redemption Reserve Account; before the redemption of debentures, it is termed as------------
Option 1: Out of capital
Option 2: Out of profit
Option 3: Both 1 and 2
Option 4: None of the above
Answer (1)
19th Jan, 2024
Correct Answer: Out of profit
Solution : Answer = Out of profit
When an amount that is at least 10 per cent of the nominal (face) value of the outstanding debentures is transferred to the Debentures Redemption Reserve Account before the redemption of debentures, it is termed as Redemption out of Profit.
Hence, the correct option is 2.
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