Read the following information and answer the question.
ABC Ltd offered 20,000, 12% debentures of ₹100 each at a premium of 10% payable as ₹40 on application (including premium) and balance on allotment redeemable after 8 years. 30,000 applications are received by the company and the allotment is made on pro-rata basis. All the money on application and allotment is received by the company timely.
How much amount will go into the securities premium reserve?
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ₹2,00,000.
Application accepted = 20,000
Face value = 100
premium of 10%
Premium is = 100 x 10/100
= ₹10
Money received on securities premium reserve = 20,000 debentures x 10
= ₹2,00,000