Tag: debentures redemption

Questions Related to debentures redemption

No DRR (Debenture Redemption Reserve) is required in case of privately placed debentures.

  1. True

  2. False


Correct Option: A

A price exclusive of the interest for the period for which the seller held the debentures is called _________________.

  1. Ex-interest price

  2. Cum-interest price

  3. Plus-interest price

  4. Additional-interest price


Correct Option: A

Withdrawal from DRR is permissible only after ____% of the debenture liability has been redeemed.

  1. 30

  2. 40

  3. 10

  4. 25


Correct Option: C

Preference shares may be redeemed out of________________.

  1. Proceeds of Debentures

  2. Proceeds of new issue of shares

  3. Out of divisible profits

  4. Both (b) and (c)


Correct Option: D

Company should created DRR equivalent to _____% of the amount of debenture issue before redemption of debenture can commence.

  1. 75

  2. 40

  3. 50

  4. 25


Correct Option: C

Premium on redemption of debentures account is recorded on issue of debentures.

  1. A real account

  2. A nominal account-income

  3. A personal account

  4. A nominal account-expenditure


Correct Option: C

As per SEBI Guidelines Debenture Redemption reserve is required to be created in case the company issue debentures with a maturity of __________.

  1. more than 18 months

  2. 2 years

  3. 10 years

  4. 5 years


Correct Option: A

Preference shares amounting to Rs. $2,00,000$ are redeemed at a premium of $5$% by issue of shares amounting to Rs. $1,00,000$ at a premium of $10$%. The amount to be transferred to capital redemption reserve ___________.

  1. Rs. $1,05,000$

  2. Rs. $1,00,000$

  3. Rs. $2,00,000$

  4. Rs. $1,11,000$


Correct Option: B

Which of the following accounts can be transferred to capital redemption reserve account?

  1. General reserve account

  2. Forfeited shares account

  3. Profit prior to incorporation

  4. Share premium account


Correct Option: A