Question : When Debentures are redeemed setting aside 10% of nominal (face) value of outstanding debentures to Debentures Redemption Reserve (DRR) known as redemption out of --------
Option 1: Out of capital
Option 2: Out of profit
Option 3: Both 1 and 2
Option 4: None of the above
Answer (1)
24th Jan, 2024
Correct Answer: Both 1 and 2
Solution : Answer = Both 1 and 2
If the debentures are redeemed both out of capital and out of profit 10% of the face value of outstanding debentures are transferred to DDR and the rest is out of capital. Then it is known as redemption out of profit and out of capital.
Hence, the correct option is 3.
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