Based on following case, answer question :
A Ltd issued 2,000, 10% debenture of ₹100 each on April 1, 2019 at a discount of 10% redeemable at a premium of 10% after five years. Company purchased assets of the book value of ₹ 2,20,000 from B Ltd. at book value and agreed to make payment of purchase consideration by issuing another 2,000, 10% Debentures of ₹100 each at a premium of 10% on above mentioned date only.
Debenture issued will be shown in the Balance Sheet as at Mar. 31, 2020 under :
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) - Long Term Borrowings.
Debentures issued will be shown in the Balance Sheet as at March 31, 2020 under Long Term Borrowings.
Debentures are a type of debt instrument issued by a company to raise funds. When a company issues debentures, it is essentially borrowing money from investors and agreeing to pay back the principal amount along with interest at a later date. Debentures are typically classified under "Long Term Borrowings" because they are usually repaid over a period longer than one year. This reflects the company's obligation to repay the debt in the future, and it is categorized under non-current liabilities.