Company Accounts

Debentures

Medium

common

Which of the following is not correct with regard to debentures:

Issued at par and redeemable at par.

Issued at a discount and redeemable at a discount.

Issued at a premium and redeemable at par.

Issued at a premium and redeemable at a premium.

✅ Correct Option: 2

Debentures are a borrowing that must be repaid at least at face value; redemption below par would mean repaying less than the amount owed, which is not permitted. Hence issue at a discount with redemption at a discount is not a valid combination.

2025: 2 June Shift 2

Choose the correct statement:-

2026: 24 May Shift 1

DINKAR Ltd., issued 2,000, 10% debentures of Rs. 100 each on April 01, 2024 at a premium of 10% and redeemable at a premium of 10%. Debenture interest was paid half yearly on September 30 and March 31 and tax deducted at source is 10% for the period ending March 31, 2025. Journal entry for Debenture interest transferred to profit and loss account for the period ending March 31, 2025 will be:

2025: 4 June Shift 2

Match List-I with List-II

List-I	List-II
(Type of Debentures)	(Characteristic of Debenture)
(A) Secured Debentures	(I) do not have a specific charge on assets of the company
(B) Redeemable Debentures	(II) do not carry a specific rate of interest
(C) Zero Coupon Rate Debentures	(III) are payable on the expiry of the specific period
(D) Unsecured Debentures	(IV) a charge is created on the assets of the company

Choose the correct answer from the options given below:

2026: 11 May Shift 1

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.

2026: 21 May Shift 1

Harsh Ltd. purchased assets of the book value of Rs.1,98,000 from Garv Ltd. It was agreed that purchase consideration be paid by issuing 16% debentures of Rs. 100 each at a discount of 10%. The number of debentures issued and journal entry for the same would be:

2026: 21 May Shift 1

Most companies raise long-term funds through debentures. Identify incorrect statements regarding debentures.

(A) Debenture holders enjoy voting rights.

(B) A company may issue different kinds of debentures, like Secured Debentures, Unsecured Debentures, Redeemable Debentures, Irredeemable Debentures, Convertible Debentures, Non-convertible Debentures.

(D) The return on Debenture is known as dividend.

Choose the correct answer from the options given below:

Which of the following is not correct with regard to debentures:

Solution

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