Suvidha Ltd. was on the verge of expansion. It was requiring ₹40 lakhs for modernisation of its Machinery. It decided to issue Rs.30 lakhs, 7% debentures to public for cash and to borrow ₹10 lakhs from SBI Bank as long term loan, with a condition from SBI to issue ₹12 lakhs. 7% debentures as a subsidiary security besides the primary security, to which the company agreed. The face value of 7% debenture was ₹100.
Identify the amount that would be shown under the sub-head long term borrowings in the Balance Sheet of Suvidha Ltd.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → ₹40 lacs
Long-term borrowings include the debentures issued to the public and the long-term bank loan. Debentures issued as collateral security create no liability of their own; they are only noted below the loan they secure, so they are not added.
Long-term borrowings:
7% Debentures issued to the public = ₹30 lakhs
Long-term loan from SBI = ₹10 lakhs
Total = ₹40 lakhs
NCERT (2026-27 edition):
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