Question

Interest on debenture for half year is to be provided

Answer 1

We calculate Interest on debentures at a fixed rate on its nominal (face) value payable quarterly, half yearly or yearly as per the terms of issue. The rate of interest is a prefix value to the debenture, say 9% Debentures and, therefore, is payable even if the company incurs a loss. It is a charge against profit.

Answer 2

ADVERTISEMENTS: Interest on debentures is usually payable half-yearly. Interest on debentures is payable even the company suffers a loss or does not earn profit. Interest on debentures is a charge against profits and, therefore, its payment is not subject to the earning of profits.

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