Question

Q.14: What is the nature of Interest on Debenture Account?

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Answer 1

• Interest on debentures is a charge against profits and, therefore, its payment is not subject to the earning of profits. Interest is paid periodically at a predetermined fixed rate on the face value of debentures and is treated as a charge against profits.

Answer 2

Interest on debentures is usually payable half-yearly. Interest on debentures is payable even the company suffers a loss or does not earn profit.