A.Ltd. issued 50,00,000, 8% Debenture of Rs 100 at a discount of 6% on April 01, 2009 redeemable at premium of 4% by draw of lots as under 20,00,000 Debentures on March, 2011 10,00,000 Debentures on March, 2013 20,00,000 Debentures on March, 2014 Compute the amount of discount to be written-off in each year till debentures are paid. Also prepare discount/loss on issue of debenture account.
Answers
Given: A.Ltd. issued 50,00,000, 8% Debenture of Rs 100 at a discount of 6% on April 01, 2009 redeemable at premium of 4% by draw of lots as under 20,00,000 Debentures on March, 2011 10,00,000 Debentures on March, 2013 20,00,000 Debentures on March, 2014 .
Concept :
DEBENTURE :
- Debenture is a written acknowledgement of debt taken by the company.
- Debentures can be issued with /without charge on the assets.
- Debentures may be issued at par, at premium or at discount.
- Journal entries on issue of debenture are also the same as in case of issue of shares. The difference is that instead of 'Share capital A/c , a debenture A/c' is opened in the books of accounts and the rate of interest on debenture is prefixed on the issue of debentures.
- Debentures can be converted into equity shares. The debentures can be redeemed in lump sum or in installments.
- Debentures are shown under the head Non current liabilities and subhead long term borrowings.
CALLS :
When the whole amount on shares is not paid on application and allotment, the unpaid amount may be called by directors in one or more installments after allotment. Such installments are known as calls.
For a record of the above the amount of discount to be written-off in each year till debentures are paid and the discount/loss on issue of debenture account are in the attachment below :
Loss on issue of debenture = 6% (discount on issue) + 4% (premium on redemption) = 10%
= (50,000 x 100 x 10/100)
Loss on issue of debenture = 5,00,00,000
Hope this answer will help you..
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A. Ltd. issued 4,000, 9% Debentures of Rs 100 each on the following terms Rs 20 on Application; Rs 20 on Allotment; Rs 30 on First call; and Rs 30 on Final call. The public applied for 4,800 Debentures. Applications for 3,600 Debentures were accepted in full. Applications for 800 Debentures were allotted 400 Debentures and applications for 400 Debentures were rejected.
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