Describe the meaning of ‘Debenture issued as Collateral Securities’. What accounting treatment is given to the issue of debentures in the books of accounts?
Describe the meaning of ‘Debenture issued as Collateral Securities’. What accounting treatment is given to the issue of debentures in the books of accounts?
Collateral securities means that when a company issue debentures in addition to a primary security. Accounting treatment of it will be done through two methods, one by opening Debenture Suspense Account and another without opening it.
For Debenture Suspense, two entries to be passed i.e.,
Bank A/c Dr.
To Bank Loan A/c
Debenture Suspense A/c Dr.
To Debenture A/c
In other method, only one entry to be passed
Bank A/c Dr.
To Bank Loan A/c
Collateral securities means that when a company issue debentures in addition to a primary security. Accounting treatment of it will be done through two methods, one by opening Debenture Suspense Account and another without opening it.
For Debenture Suspense, two entries to be passed i.e.,
Bank A/c Dr.
To Bank Loan A/c
Debenture Suspense A/c Dr.
To Debenture A/c
In other method, only one entry to be passed
Bank A/c Dr.
To Bank Loan A/c
