Question

Z Ltd. had issued following debentures:
(a) 1,00,000, 10% fully convertible debentures of ₹ 100 each on 1st April, 2016 redeemable by conversion after 5 years.
(b) 20,000, 10% Debentures of ₹ 100 each redeemable after 4 years, 25% Debentures in Cash and 75% by conversion.
State the amount of DRR required to be created as per the Companies Act,2013.

Answer 1

Answer:

very long question..........

Answer 2

The amount of DRR required to be created as per the Companies Act,2013 are calculated below:

Explanation:

Given,

(a) 1,00,000, 10% fully convertible debentures of ₹ 100 each on 1st April, 2016 redeemable by conversion after 5 years.

As the debentures are fully convertible, there is no need for creation of Debenture Redemption Reserve.

(b) 20,000, 10% Debentures of ₹ 100 each redeemable after 4 years, 25% Debentures in Cash and 75% by conversion.

For the non-convertible part of debentures, DRR would be created as follows:

Calculation of the Amount required to be transferred to DRR

Amount required to be transferred to DRR

= 25% of Face Value of Debentures (Non-convertible)

$=20,00,000 \times 25 \%\\\\=20,00,000 \times \frac{25}{100} \\\\=5,00,000$

Amount required to be transferred to DRR

= 25% of Face Value of Debentures

$=25 \% \text { of } \mathrm{Rs} .5,00,000\\\\={Rs} .1,25,000$

The amount of DRR required to be created as per the Companies Act, 2013 is Rs. 1,25,000