Choose the correct statement:-

When debentures are issued at a discount (below face value), the discount amount represents a capital loss to the company. This loss needs to be recorded and written off over the life of the debentures.

The accounting treatment allows the discount amount to be debited to "Loss on Issue of Debentures Account". This account serves as a consolidated account for recording capital losses related to debenture issuance.

The journal entry at the time of recording discount would be:

Particulars	Debit (₹)	Credit (₹)
Loss on Issue of Debentures A/c	xxx
$\quad$ To Debentures A/c		xxx
(Being discount on issue recorded)

The "Loss on Issue of Debentures Account" can include both:

• Discount on Issue of Debentures
• Premium on Redemption of Debentures

Both represent capital losses and are typically written off during the tenure of the debentures.

Option 1 is incorrect as it states the opposite - that discount cannot be debited to Loss on Issue of Debentures Account.

Options 3 and 4 are incorrect because they suggest incorrect cross-entries between discount and premium accounts. Premium on Redemption is separately debited to either its own account or the Loss on Issue of Debentures Account, but not to Discount on Issue Account. Similarly, Discount cannot be debited to Premium on Redemption Account.