Company Accounts

Debentures

Easy

common

Blue Prints Ltd., purchased building worth Rs.1,50,000, machinery worth Rs.1,40,000 and furniture worth Rs.10,000 from XYZ Co., and took over its liabilities of Rs. 20,000 for a purchase consideration of Rs. 3,15,000. Blue Prints Ltd., paid the purchase consideration by issuing 12% debentures of Rs.100 each at a premium of 5%. Number of debentures issued are-

1,000

3,000

2,000

1,500

✅ Correct Option: 2

The purchase consideration paid by Blue Prints Ltd. is Rs. 3,15,000.

The debentures are issued at a premium of 5%.

Face value of each debenture = Rs. 100

Premium per debenture = 5% of Rs. 100 = Rs. 5

Issue price per debenture = Rs. 100 + Rs. 5 = Rs. 105

Number of debentures issued = $\frac{\text{Purchase Consideration}}{\text{Issue Price per Debenture}}$

Number of debentures issued = $\frac{3,15,000}{105}$ = 3,000 debentures

The assets purchased (Building, Machinery, Furniture) and liabilities taken over are used to determine the net assets acquired, but the actual payment is made based on the agreed purchase consideration of Rs. 3,15,000, which is discharged by issuing debentures at their issue price of Rs. 105 each.

Correct Option: 2 (3,000 debentures)

2026: 11 May Shift 1

The following journal entry appears in the books of XYZ Co. Ltd.

Particulars		Dr. (Rs.)	Cr. (Rs.)
Bank A/c	Dr.	4,80,000
Loss on issue of debentures A/c	Dr.	1,50,000
To 12% Debentures A/c			6,00,000
To Premium on Redemption of Debenture A/c			30,000

Calculate the rate at which debentures have been issued at a discount.

2023: 28 May Shift 1

If 5% debenture of Rs. 8,00,000 of Rs. 100 were issued at 15% premium. Amount is payable as Rs. 25 on applications, Rs. 50 on allotment and Rs. 40 on 1st and final call. How much amount should be credited to "Security Premium Reserve A/c".

2026: 19 May Shift 1

Mehak Ltd. took a loan of Rs. 30,00,000 from a bank against primary security worth Rs. 40,00,000 and issued 4,000, 6% debentures of Rs. 100 each as a collateral security. The company, again after one year, took a loan of Rs. 50,00,000 from the bank against the plant as primary security and deposited 6,000, 6% debentures of Rs. 100 each as collateral security.

What is the amount of debenture suspense account in the balance sheet?

2025: 15 May Shift 1

G.S. Rai company ltd. purchased assets of the book value of Rs. 98,000 from another firm. It was agreed that purchase consideration be paid by issuing 11% debentures of Rs. 100 each. Assume debentures have been issued at discount of 20%

Identify the number of debentures issued by the company to the vendor

2025: 13 May Shift 2

When debentures are issued at par and redeemable at a premium, the premium payable on redemption is debited to:

2026: 21 May Shift 1

"If the company fails to repay the loan along with interest, the lender is free to receive his money from the sale of the primary security and if the realisable value of the primary security falls short to cover the entire amount, the lender has the right to invoke the benefit of additional security whereby debentures may either be presented for redemption or sold in the open market".

Identify the type of issue of debentures stated in the above statement.

Solution

Related questions:

Keyboard Shortcuts

CUET Accountancy Past Year Questions (Topic-Wise)