On 1st July/22, Centaur Ltd. issued Rs. 25,00,000 8% debentures of Rs. 100 each as collateral security to first Level Bank against loan dues of Rs. 20,00,000. How much amount will be shown in the Balance sheet?
On 1st July/22, Centaur Ltd. issued Rs. 25,00,000 8% debentures of Rs. 100 each as collateral security to first Level Bank against loan dues of Rs. 20,00,000. How much amount will be shown in the Balance sheet?
Solution
✅ Correct Option: 3
Debentures issued as collateral security do not create a separate liability. Only the actual loan of Rs. 20,00,000 is shown as long-term borrowing on the liabilities side, with the debentures issued as collateral disclosed by way of a note. Hence the amount shown is Rs. 20,00,000.
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