Question

X Ltd. issued 30,000, 10% Debentures of ₹ 100 each at a discount of 5% on 1st April, 2015. As per the terms of issue, debentures are to be redeemed at the end of five years. Show the amount of discount to be written off from Statement of Profit and Loss every year.

Answer 1

The amount of discount to be written off from Statement of Profit and Loss every year are calculated below:

Explanation:

Given,

X Ltd. issued 30,000, 10% Debentures of ₹ 100 each at a discount of 5% on 1st April, 2015.

As per the terms of issue, debentures are to be redeemed at the end of five years.

Calculation of Discount Amount:

Discount Amount

$=30,00,000 \times 5 \%=1,50,000$

Calculation of Written off discount Amount

Written off discount Amount (every Year)

$=\frac{1,50,000}{5}=30,000$