Tag: issue of debentures for consideration other than cash

Questions Related to issue of debentures for consideration other than cash

Which of the following is true with regard to $10\%$ Debentures issued at a discount of $20\%$?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. The carrying amount of debentures is $80\%$ of face value

  2. Issue price and the carrying amount of debentures will necessarily be equal

  3. At the time of redemption, the debenture holder will be paid the issue price

  4. The carrying amount and the face value of debentures are equal

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Correct Option: D

Which of the following is not a characteristic of Bearer Debentures?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. They are treated as loan

  2. Their transfer requires a deed of transfer

  3. They are transferable by mere delivery

  4. The interest on it is paid to the bearer or holder

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Correct Option: B

Income tax deducted from interest paid on debentures is shown as.

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. Expenses of the Co.

  2. Asset of the Co.

  3. Liability of the Co.

  4. Income of the Co.

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Correct Option: C

Which of the following statements is true?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. A debenture holder is owner of the company

  2. A debenture holder can get his money back only on the liquidation of the company

  3. A debenture issued at a discount can be redeemed at a premium

  4. A debenture holder receives interest only in the event of profits

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Correct Option: C

When debentures are issued as collateral security, the final entry for recording the transaction in the books is?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. Credit Debentures A/c and Debit Cash A/c

  2. Debit Debentures Suspense A/c and Credit Cash A/c

  3. Debit Debentures Suspense A/c and Credit Debentures A/c

  4. Debit Cash A/c and credit the Loan A/c for which security is given

  5. Debit Debentures A/c and credit the Loan A/c for which security is given

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Correct Option: C

Which of the following statements is false?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. At maturity, debenture holders get back their money

  2. Debentures can be forfeited for non-payment of call money

  3. In company's balance sheet, debentures are shown under the head Secured Loans

  4. Interest on debentures is charged against profits

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Correct Option: B

Discount on issue of debentures is a.

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. Revenue loss to be charged in the year of issue

  2. Capital loss to be written off from capital reserve

  3. Capital loss to be written off over the period of the debentures

  4. Capital loss to be shown as goodwill

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Correct Option: C

W Ltd. issued $40,000$, $8\%$ debentures of Rs. $10$ each at par, which are redeemable after $5$ years at a premium of $20\%$. The amount of loss on redemption of debentures to be written off every year will be.

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. Rs. $80,000$

  2. Rs. $20,000$

  3. Rs. $8,000$

  4. Rs. $16,000$

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Correct Option: D

How many debentures will a company be required to issue for satisfying the purchase consideration of Rs. $28,80,000$, if debentures of Rs. $100$ are issued at a premium of Rs. $20$ per debenture?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. $24,000$

  2. $28,800$

  3. $36,000$

  4. $32,000$

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Correct Option: A

Which of the following statement is false?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. A company can issue convertible debentures

  2. Debentures cannot be secured

  3. A company can issue redeemable debentures

  4. Debentures have no right to participate in profits over and above their fixed interest

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Correct Option: B