Essay regarding Principles


LEARNING TARGETS I) II) III) IV) V) VI) VII) IX) X) Be familiar with meaning and features of debentures. Differentiate among shares and debentures. Understand different classes of debentures Journal items regarding issue of debentures for cash and for account other than money. Accounting take care of debentures granted as security security Accounting treatment of issue and payoff of debentures at doble, discount with premium. Understand the methods of payoff of debentures. Understand the payoff of debentures by purchase in the open market Understand payoff of debentures by conversion into shares and fresh debentures. VIII) Accounting treatment of redemption of debentures away of capital and profit.


So what do you designed by Debentures?

Debentures is an instrument of debt owned by a firm as an acknowledgement of debt, this kind of measurements will be issued beneath the seal of company and duly authorized by certified signatory. 2) Write any kind of four types of debentures i) ii) iii) i) 3) Redeemable debentures Never ending Debentures Collapsible debentures Properly secured debentures

Precisely what is debenture Trust Deed? Debenture trust deed is a record created by the company whereby trustee is definitely appointed to shield the interest of debenture owners before they can be offered to get public subscription.

4) What is meant simply by convertible debentures? Convertible debentures are individuals, the owners of which get an option to exchanging the number of their debentures with fairness shares or perhaps other securities after a particular period. 5) Why is high quality on the concern of debentures considered as a capital revenue? Premium around the issue of debentures is regarded as a capital profit since it is not an cash flow arising from the standard course of organization operations. eighty five


Describe deep low cost Bond The moment debentures happen to be issued with out interest rate and issue cost is thereby discounted, the issue of debenture is said to have been made as deep discount bond.

7) Differentiate among shareholders and debenture holder, Point of Difference Reveal holder Debenture holder 1) Status There are the owners of the company They are paid out Dividend Shares are not guaranteed They are the collectors of the business They are paid out interest Debentures are typically secured

2) 3)

Come back Security

8) What is the size of interest about debentures? Fascination on debentures is a demand against profits. 9) Ans. State basically, the SEBI Guidelines regarding Debenture Payoff Reserve By per SEBI Guidelines, an amount equal to 50 percent of the debenture issue must be transferred to DRR before the payoff begins. Quite simply, before payoff, at least an amount comparable to 50% with the debenture concern must stand to the credit rating of DRR Name the head under which in turn discount in issue of debentures shows up in the Balance Sheet of " C" Business.



Discount upon issue of debentures will be under the going Miscellaneous Expenditure. 11) Precisely what are the exclusions for creating debenture Redemption Reserve? (i) A great infrastructure organization, (ii) Debentures are released for less than 18 months maturity period (iii) if perhaps debentures issued by private placement. 12) What do you mean simply by debentures granted as guarantee security? A defieicency of debentures like a collateral protection means the void of debentures because an additional protection against the loan in addition to principal protection that may be offered.


A Ltd released 5, 500 13% debentures of Rs. 100 each at equiparable and raised a loan of Rs. eighty, 000 from Bank. Collaterally secured simply by Rs. 100, 000 13% debentures. How could you show the debenture in the Balance Sheet of the Company assuming that the organization has registered the issue of Debentures as guarantee security in the books.


Balance Sheet Liabilities Secured Loans Sum 13% Debenture 5, 000 deb of Rs. 100 each at 500000 doble Bank loan (secured by the 80000 issue of 1000 13% deb of Rs. 75 each) Property Current resources Bank a/c Amount 500000...

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