Tag: company accounts part - 2 (accounting for debentures)

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Questions Related to company accounts part - 2 (accounting for debentures)

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

T Ltd. purchased land and building from U Ltd. for a book value of Rs. $3,00,000$. The consideration was paid by issue of $12\%$ Debentures of Rs. $100$ each at a discount of $20\%$. The debentures account is credited with.

  1. Rs. $3,00,000$

  2. Rs. $3,75,000$

  3. Rs. $3,60,000$

  4. Rs. $2,40,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Consideration = 3,00,000. Issue price = 100 - 20% = 80. Number of debentures = 3,00,000 / 80 = 3,750. Debenture account is credited with face value: 3,750 * 100 = 3,75,000.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

G Ltd purchased land and building from H Ltd. at a book value of Rs. 2,00,000. The consideration was paid by issue of 12% debentures of Rs. 100 each at a discount of 20%. For this transaction, the debentures account would be credited with -

  1. Rs. 2,60,000

  2. Rs. 2,50,00

  3. Rs. 2,40,00

  4. Rs. 1,60,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Debentures issued at discount of 20%. 
 Number of Debentures issued = 2,00,000/80
                                                     = 2500
Face Value of Debentures = Rs. 100
Debentures account would be credited with 2500*100 = Rs. 2,50,000