Company Accounts

Debentures

Medium

common

X Ltd. purchased an asset of book value of Rs. 4,00,000 and took over the liability of Rs. 50,000 from Y Ltd. It was agreed that the purchase consideration, settled at Rs. 3,80,000, will be paid by issuing debentures of Rs. 100 each at a discount of 10 % . How many debentures will be issued by X Ltd. to Y Ltd.?

3,500

3,800

4,222

4,223

✅ Correct Option: 3

Issue price per debenture $= 100 - 10\% = 90$ .

Number of debentures $= 3{,}80{,}000/90 = 4{,}222.22$ .

Fractional debentures cannot be issued, so the figure is rounded down to $4{,}222$ . The book value of the asset and the liability taken over are not used once the consideration is settled.

2023: 29 May Shift 2

On 1st July/22, Centaur Ltd. issued Rs. 25,00,000 8% debentures of Rs. 100 each as collateral security to first Level Bank against loan dues of Rs. 20,00,000. How much amount will be shown in the Balance sheet?

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.

2022: 15 July Shift 2

Discount on Issue of Debentures

A. Is not a capital gain

B. Can be written off in any year

C. Can be written off from securities premium Reserve

D. Can be written off from General Reserve

Choose the correct answer from the options given below:

2022: 20 Aug Shift 2

Blue Prints Ltd. purchased a 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.

Calculate the Goodwill/Capital Reserve to be recorded by Blue Print Ltd.

2026: 19 May Shift 1

XYZ Industries Ltd., issued 2,000, 10% debentures of Rs. 100 each, at a premium of Rs. 10 per debenture payable as follows: On application Rs. 50. On allotment Rs. 60. The debentures were fully subscribed, and all money was duly received. Calculate the amount received at the time of allotment.

2022: 20 Aug Shift 2

Match List I with List II

List I	List II
A. Excess of purchase consideration over value of net assets	I. Issue Debentures as collateral security
B. Excess of net assets over purchase consideration	II. Goodwill
C. Debenture Suspense Account	III. Issue of Debentures for consideration other than cash
D. Assets received against Debentures	IV. Capital Reserve

Choose the correct answer from the options given below:

Solution

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