Answer briefly the following question:
State two reasons for a company to purchase its own debentures from the open market.

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Solution

The company can purchase its own debentures only it is authorised by its Article of Association.
Following are the reasons for which company purchase its own debentures from the open market:
1. To save interest payable on debentures to debenture holders.
2. For the purpose of immediate cancellation.

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Can the company purchase its own debentures?

A.Ltd. purchased its own debentures of the face value of Rs.2,00,000 from the open market for immediate cancellation at Rs.92. Record the journal entries.

A Ltd purchased its own debentures of the face value of Rs 2,00,000 from the open market for immediate cancellation at Rs 92. Pass the journal entries.

Q. Whether the following items will be included in National Income? Give reasons for your answer.
(i) Purchase of a second hand machine from a domestic firm.
(ii) Interest received on loans taken by government.
(iii) Leave travel allowance paid to employees by a company.
(iv) Direct purchases made by resident households.
(v) Interest received on debentures by debenture-holders.

Assuming that Proprietary Ratio is 0.6 : 1, state giving reasons, whether the ratio will increase, decrease or will not change in each one of the following cases:

(i) Issue of new equity shares for cash.

(ii) Issue of equity shares against purchase of machinery.

(iii) Issue of debentures against purchase of machiney.

(iv) Redemption of debentures for cash.

(v) Conversion of debentures into preference shares.

(vi) Buy-back of its own shares by a company.

(vii) Purchase of a fixed asset for cash.

(viii) Purchase of a fixed asset on long-term deferred payment basis.

(ix) Sale of a fixed asset costing Rs. 1,00,000 for Rs. 80,000.

(x) Sale of a fixed asset costing Rs. 2,00,000 for Rs. 2,50,000.

(xi) Issue of Bonus Shares.

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Answer briefly the following question:State two reasons for a company to purchase its own debentures from the open market.

The company can purchase its own debentures only it is authorised by its Article of Association.Following are the reasons for which company purchase its own debentures from the open market:1. To save interest payable on debentures to debenture holders.2. For the purpose of immediate cancellation.

Answer briefly the following question:
State two reasons for a company to purchase its own debentures from the open market.