Issue and Redemption of Debentures

Debentures that are convertible into equity shares or other securities at the option of the debenture holders or the company are called:

1. Naked Debentures
2. Bearer Debentures
3. Convertible Debentures
4. Redeemable Debentures

A company decides to redeem 5,000, 10% Debentures of ₹100 each at a premium of 5%. What total amount will be debited to the Debenture Holders Account at the time of making the payment due entry?

1. ₹5,00,000
2. ₹5,25,000
3. ₹4,75,000
4. ₹25,000

At the time of redemption of debentures, Tax Deducted at Source (TDS) on debenture interest is credited to which account in the company's books?

1. Interest on Debentures Account
2. Debenture Holders Account
3. TDS Payable Account
4. Profit and Loss Account

When all debentures are fully redeemed, any unutilized balance remaining in the Debenture Redemption Reserve (DRR) Account is transferred to:

1. Capital Reserve Account
2. Securities Premium Account
3. General Reserve Account
4. Statement of Profit and Loss

If a company issues ₹2,00,000, 10% Debentures at a discount of 5% as collateral security to a bank for a loan of ₹1,50,000, and passes a journal entry for the issue of collateral security, which account will be debited?

1. Bank Loan Account
2. Debenture Suspense Account
3. Loss on Issue of Debentures Account
4. 10% Debentures Account

Which of the following statements correctly distinguishes a Shareholder from a Debenture Holder?

1. A shareholder receives interest; a debenture holder receives dividends.
2. A shareholder is an owner of the company; a debenture holder is a creditor of the company.
3. A debenture holder has voting rights in annual general meetings; a shareholder does not.
4. Dividend on shares is a charge against profit; interest on debentures is an appropriation of profit.

XYZ Ltd. issued 1,000, 12% Debentures of ₹100 each at par, redeemable at a premium of 10%. Which account will be credited for the premium payable on redemption in the issue journal entry?

1. Premium on Redemption of Debentures Account by ₹10,000
2. Loss on Issue of Debentures Account by ₹10,000
3. Securities Premium Account by ₹10,000
4. Profit and Loss Account by ₹10,000

When a company redeems its own debentures by purchasing them directly from the open market for immediate cancellation at a price below their nominal face value, the resulting profit is credited to:

1. General Reserve Account
2. Profit and Loss Appropriation Account
3. Capital Reserve Account
4. Debenture Redemption Reserve Account

What is the minimum percentage of the nominal value of debentures maturing during the year ending on 31st March that a company must invest in Debenture Redemption Investment (DRI) on or before 30th April of that year?

1. 10%
2. 15%
3. 25%
4. 50%

According to the Companies Act, 2013 and Rule 18 of Companies (Share Capital and Debentures) Rules, what percentage of the nominal value of debentures must be created as Debenture Redemption Reserve (DRR) prior to redemption by unlisted companies (other than NBFCs and HFCs)?

1. 25%
2. 100%
3. 10%
4. 15%

Interest on debentures is calculated as a fixed percentage on which value of the debentures?

1. Issue Price
2. Market Value
3. Nominal (Face) Value
4. Redemption Value

A company purchased assets worth ₹4,50,000 from a vendor and issued 10% Debentures of ₹100 each at a discount of 10% in full satisfaction of the purchase price. How many debentures will be issued to the vendor?

1. 4,500 debentures
2. 5,000 debentures
3. 4,000 debentures
4. 5,500 debentures

Discount or Loss on Issue of Debentures is written off according to current accounting practices (AS-16/AS-26) in which timeframe?

1. Over the total lifetime of debentures in equal annual installments.
2. In the year in which debentures are issued.
3. At the time of final redemption of debentures.
4. Transferred to Capital Reserve at the end of 5 years.

When debentures are issued as collateral security for a bank loan, which of the following accounting treatments is correct if no journal entry is passed for the debentures?

1. Debentures are shown on the Assets side of the Balance Sheet.
2. Debentures are shown under Long-term Borrowings, and a footnote is added detailing the collateral security.
3. Debentures are debited to Profit and Loss Account.
4. Debentures are credited to General Reserve Account.

When debentures of ₹100 each are issued at a discount of 10% and are redeemable at a premium of 5%, what is the total loss on issue per debenture to be recorded in the books?

1. ₹10
2. ₹5
3. ₹15
4. ₹20