Issue and Redemption of Debentures · Class 12 · CBSE · Commerce Accountancy
X Ltd. issued 1,000, 9% debentures of Rs. 100 each at a discount of 10%, redeemable at par after 5 years. What is the total amount of Loss on Issue o…
Practice question from Issue and Redemption of Debentures (Class 12 · CBSE · Commerce Accountancy), with the correct answer and a step-by-step solution.
medium · MCQ · Q-C234A3
X Ltd. issued 1,000, 9% debentures of Rs. 100 each at a discount of 10%, redeemable at par after 5 years. What is the total amount of Loss on Issue of Debentures account to be written off if the discount is to be written off over the life of the debentures?
- A.Rs. 1,00,000Correct answer
- B.Rs. 10,000 per year
- C.Rs. 50,000
- D.Rs. 1,10,000
Solution
The total discount on issue is 1,000 debentures Rs. 10 = Rs. 1,00,000. Since they are redeemable at par, there is no premium on redemption. Thus, the total loss on issue equals the total discount of Rs. 1,00,000.
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