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Super Profit Method

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Question

State to whether the following statements are True/False.

Premium on issue of debentures is recorded on the asset side of balance sheet.

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Solution

False

Explanation: The premium received on the issue of debentures represents the excess amount received over and above the face value of the debentures. It is a capital gain for the company. Therefore, it is shown on the Liabilities side of the Balance Sheet under the head "Reserves & Surplus".

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