Company Accounts

Debentures

Medium

common

When one company acquires the entire business of other firm and if the amount of debentures issued is more than the amount of the net assets taken over, the difference will be:

Treated as capital reserve and the same shall also be credited while passing the journal entry for the purchase of vendor's business

Treated as value of goodwill and the same shall also be debited while passing the journal entry for the purchase of vendor's business

Treated as value of goodwill and the same shall also be credited while passing the journal entry for the purchase of vendor's business

Treated as value of capital reserve and the same shall also be debited while passing the journal entry for the purchase of vendor's business

✅ Correct Option: 2

Purchase consideration paid in debentures that exceeds the net assets taken over represents payment for the vendor's reputation, i.e. goodwill. Goodwill is an asset, so on recording the purchase of business it is debited along with the assets acquired. Capital reserve arises only in the reverse case, where net assets exceed the consideration.

2026: 21 May Shift 2

"These debentures do not have a specific charge on the assets of the company". Name the type of debenture being highlighted in this statement.

2025: 13 May Shift 1

Which statements are wrong about debentures?

(A) Debenture is a part of owned capital.

(B) The debentures cannot be issued at a discount of more than 10% of the face value.

(D) Redeemable debentures are those debentures, which are payable on the expiry of the specific period.

Choose the correct answer from the options given below:

2023: 11 June Shift 3

Debentures that will be redeemed only at the time of winding up of the company are known as :

2025: 14 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Secured Debentures	(I) Which are payable on the expiry of the specific period either in lump sum or in instalments during the life time of the company.
(B) Unsecured Debentures	(II) Debentures where a charge is created on the assets of the company for the purpose of payment in case of default.
(C) Redeemable Debentures	(III) These debentures are repayable on the winding-up of a company or on the expiry of a long period.
(D) Irredeemable Debentures	(IV) Debentures do not have a specific charge on the assets of the company.

Choose the correct answer from the options given below:

2026: 13 May Shift 2

Interest is not payable/provided on _______________.

2025: 29 May Shift 2

Which is not a type of Debenture :-

When one company acquires the entire business of other firm and if the amount of debentures issued is more than the amount of the net assets taken over, the difference will be:

Solution

Related questions:

Keyboard Shortcuts

CUET Accountancy Past Year Questions (Topic-Wise)