CA Foundation · Accounting · Company Accounts
Kulkarni Ltd. issued 1,000 debentures of ₹100 each at a discount of 4%, redeemable after 4 years at a premium of 6%. The total amount to be written off as Loss on Issue of Debentures is:
The total loss on issue of debentures is ₹10,000. Issuing at a 4% discount gives ₹4,000, and redemption at a 6% premium adds ₹6,000. Both are costs to the company, so they are added together and written off over the life of the debentures.
- A₹6,000
- B₹4,000
- C₹10,000Correct
- D₹2,000
Explanation
Face value = ₹1,00,000. Discount on issue = 4% = ₹4,000. Premium on redemption = 6% = ₹6,000. Total loss on issue = ₹4,000 + ₹6,000 = ₹10,000. ₹6,000 omits the discount, and ₹2,000 wrongly nets the two amounts.
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