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X Ltd. issued 2,000, 10% debentures of Rs. 100 each at a discount of 8% on April 1, 2025. These debentures are redeemable at par after ten years. The company has a balance in Securities Premium Reserve of Rs. 15,000. Calculate the amount of discount to be written off from the Securities Premium Reserve.

Solution

✅ Correct Option: 1

Total discount =2,000×100×8%=16,000= 2,000 \times 100 \times 8\% = 16,000.

Securities Premium Reserve can absorb only up to its available balance of 15,00015,000, so 15,00015,000 is written off against it and the remaining 1,0001,000 against the Statement of Profit and Loss.

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