Question

Discount on issue of debentures is a _____.

• A. Capital loss to be shown as goodwill
• B. Capital loss to be written off over the tenure of debentures
• C. Revenue loss to be charged in the year of issue
• D. Capital loss to be written off from the capital reserve

Answer 1

The correct option is B Capital loss to be written off over the tenure of debentures

Discount on issue of debentures is a capital loss and over a period of 3 to 5 years or is charged to “Securities Premium Account” as per the guidelines issued by ICAI. The discount on issue of debentures can be written-off either by debiting it to profit and loss or to securities premium account.