Where will the Premium on redemption of debentures be shown in the balance sheet until debentures are redeemed by the company?

Non-current liabilities

The correct answer is option 2- Non-current liabilities.

* Premium on redemption is a liability of a company payable in future. It is a provision and is shown under the head Non-current liabilities under sub-head ‘Long-term Borrowings’ until debentures are redeemed. Non-Current Liabilities are long-term debts a company owes that don't need to be repaid within a year. These liabilities are spread out over several years.

• Current Assets: These are assets that are expected to be converted into cash or used up within one year or within the operating cycle of the business, whichever is longer. Examples include cash, accounts receivable etc.

• Current Liabilities: These are obligations that are expected to be settled within one year or within the normal operating cycle of the business. Current liabilities include accounts payable, outstanding expenses etc.

• Non-current Assets: Those assets which are not expected to be converted into cash or used up within one year. Non-current assets  include property, plant, equipment, intangible assets (like patents or copyrights), and other assets with a useful life exceeding one year. These assets are held for long-term use and are not intended for sale in the normal course of business.