Important Questions for Redemption of Debentures Chapter 10

Important Questions with Answers for CBSE Class 12 Accountancy Chapter 10- Redemption of Debentures which is outlined by expert Accountancy teachers from the latest version of CBSE (NCERT) books.

CBSE Class 12 Accountancy Chapter – 10 Important Questions

Question 1

Provide the meaning of Redemption of Debentures.

Answer:

Redemption of Debentures means, discharging the liability on a/c of the debentures issued by an enterprise executing the repayment to the debenture holders.

Question 2

Premium payable on redemption of debentures is in the nature of,

(a) Liability a/c

(b) Asset a/c

(c) Expense a/c

(d) None of these

Answer:

(a) Liability A/c

Question 3

What are the different ways of redeeming the debentures?

Answer:

Following are four ways of redeeming the debentures:

1. Payment in Lump Sum
2. Payment in Instalments
3. By conversion into shares or as new debentures
4. By purchasing of debentures in open market

Question 4

Expand DRI.

Answer:

DRI refers to Debentures Redemption Investment. It is the amount of debenture redemption reserve that is invested in the form of securities. The amount invested should be 15% of the nominal value of debentures that needs to be redeemed during the fiscal year.

Question 5

Explain DRR.

Answer:

DRR refers to Debentures Redemption Reserve, It is a fund that is maintained by the company which issues debentures. Having a DRR is assurance of funds availability in order to meet obligations of debenture owners. It is helpful in minimising the risk of defaulting in payment of debentures.

Question 6

The provisions of the Companies Act, 2013 in respect of redemption of debentures are to protect the interest of,

(a) Debenture holders

(b) Creditors

(c) Shareholders

(d) Bankers

Answer:

(a) Debenture holders

Question 7

Mention three points that should be kept in mind during redemption of debenture.

Answer:

Three points that should be kept in mind during redemption of debenture are:

• Time of Redemption of Debentures
• Amount of Redemption of Debentures
• Sources of Redemption of Debentures

Question 8

Mention any two specified securities for DRR?

Answer:

Specified securities for DRR are:

• In the form of deposits with any Scheduled Bank, that is free from any charge
• In the form of unencumbered securities of the Central Government or any State Government

Question 9

ABC Ltd. is to redeem 10,000, 10% debentures of ₹. 100/- each on 30th June 2017. How much amount must be transferred to DRR by it?

(a) ₹ 2,50,000/-

(b) ₹ 1,00,000/-

(c) ₹ 5,00,000/-

(d) Nil

Answer:

(a) ₹ 2,50,000 ( Since DRR = 25% of Face Value of Debentures)

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