Question

Typhoo Ltd.issued 5,000, 9% Debentures of ₹ 100 each at a discount of 5% redeemable at the end of 5 years at a premium of 10%. Typhoo Ltd.has a balance of ₹ 2,00,000 in Securities Premium Reserve. Loss on Issue of debentures is to be written off equally over the life of debentures from Securities Premium Reserve to the extent possible.
Pass the journal entries for writing off the Loss on Issue of Debentures.

Answer 1

Explanation:

Calculation of discount to be written off = value x loss on issue

=5,00,000 x 15 % = 75,000

calculation of loss on issue to be written off for 5 years = 75,000/5 = 15,000