When debentures are issued at par and are redeemable at a premium, the loss on such issue is debited to :

When debentures are issued at par but redeemable at a premium, the company receives the face value but must pay back more than the face value at redemption. This difference represents a loss to the company.

Example: A company issues 1,000 debentures of ₹100 each at par, redeemable at 10% premium.

• Amount received = ₹1,00,000
• Amount to be paid at redemption = ₹1,10,000
• Loss = ₹10,000

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This loss is treated as a capital loss since it relates to raising capital. The accounting treatment is:

At the time of issue:

The premium payable on redemption is debited to Loss on Issue of Debentures Account and credited to Premium on Redemption of Debentures Account.

$\text{Loss on Issue} = \text{Redemption Value} - \text{Issue Value}$

The Loss on Issue of Debentures Account appears on the assets side of the Balance Sheet under the heading "Miscellaneous Expenditure" (to the extent not written off).

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Why not the other options?

• Statement of Profit and Loss: The loss is transferred here gradually over the life of debentures for write-off, but not debited initially.
• Debentures Applications and Allotment Account: This is used only for recording application money and allotment process, not for recording losses.
• Debenture Redemption Reserve: This is created for redemption purposes, not for recording losses on issue.

The correct answer is Option 3: Loss on issue of debentures account.