MyQuestionIcon

1

You visited us 1 times! Enjoying our articles? Unlock Full Access!

Issued at Premium and Redeemed at Par

Premium on is...

Question

Premium on issue of debentures is _________.

A

Capital Loss

No worries! We‘ve got your back. Try BYJU‘S free classes today!

B

Capital Profit

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

C

Revenue Profit

No worries! We‘ve got your back. Try BYJU‘S free classes today!

D

Revenue Loss

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is B Capital Profit
If the debentures are issued at price more than its nominal value, such issue is called as issue of debenture on premium. The excess amount over the face value/nominal value is called debenture premium.
The premium on issue of debenture is a capital profit and this need to be transferred to capital reserve account and to be shown in the liability side of the balance sheet.
This should not be transferred to profit & loss account as it is not generated through the normal business activity.

Suggest Corrections

thumbs-up

0

Similar questions

Q. Global Ltd.issued 10,000, 8% Debentures of ₹ 100 each redeemable at the end of 3 years at a premium of ₹ 9.
Pass the journal entries for writing off the Loss on Issue of Debentures. Also prepare Loss on Issue of Debentures Account.

Q. On 1st April, 2013, ABC Ltd. issued 10,000 , 10% Debentures of ₹ 100 each at a discount of 4% redeemable after 5 years at a premium of 6% .
Pass the necessary journal entries for issue of debentures and writing off Loss on issue of Debentures. Also prepare Loss on issue of Debentures Account.

Q. When debentures are issued at a discount & redeemed at a premium, we route discount on issue of debentures a/c through on issue of debentures a/c.

Q. Global Ltd. issued 10,000, 8% Debentures of ₹ 100 each redeemable in four equal instalments by draw of lots from the end of 3 years at a premium of ₹ 9.
Pass the Journal entries for writing off the Loss on Issue of Debentures. Also prepare Loss on issue of Debentures Account.

Q. Tetley Ltd. issued 10,000,9% Debentures of ₹ 100 each at a discount of 5% redeemable at the end of 5 years at a premium of 10%. Tetley Ltd. has a balance of ₹ 50,000 in Securities Premium Reserve . Loss on Issue of debentures is to be written off equally over the life of debentures.
Pass the journal entries for writing off the Loss on Issue of Debentures.

View More

Join BYJU'S Learning Program

similar_icon

Related Videos

lock

Issued at Par and Redeemed at Par

ACCOUNTANCY

Watch in App

explore_more_icon

Explore more

Issued at Premium and Redeemed at Par

Standard XII Accountancy

Join BYJU'S Learning Program

CrossIcon