Is a debenture a loan?

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Solution

Yes, debentures are loans that are issued to companies or government offices. It is a kind of debt instrument of unsecured nature issued for a long term of a decade or more.

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Similar questions

X.Ltd. issued 15,000, 10% debentures of Rs 100 each. Give journal entries and the Balance Sheet in each of the following cases:

(i) The debentures are issued at a premium of 10%;

(ii) The debentures are issued at a discount of 5%;

(iii) The debentures are issued as a collateral security to bank against a loan of Rs 12,00,000; and

(iv) The debentures are issued to a supplier of machinery costing Rs 13,50,000.

Distinguish between a debenture and a share. Why is debenture known as loan capital? Explain.

Distinguish between a debenture and a share. Why debenture is known as loan-capital? Explain.

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