Question

What is meant by 'Issue of debenture at discount and redeemable at premium'? (Answer in one sentence)

Answer 1

Such a premium to be paid will be treated as a capital loss. And while the premiumamount is only paid at redemption, it will be shown as a liability since the issue of the debentures. At Discount: This is when the debentures are redeemed at a price lower than face value.

Answer 2

Discount on the  issue of debentures is a capital loss to be offset over a period of time depending on the terms of issue.

• It is recorded on the balance sheet's liability side until it's paid off.
• Therefore, as the company promises to pay more at the time of redemption, there is a risk of the equal amount due to "loss on debenture issue account,
• The journal entry for the same is -   Bank a/c Dr. (with the amount being received)   To Debenture application & allotment a/c