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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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