G.S. Rai company Ltd. purchased assets of the book value of ₹98,000 from another firm. It was agreed that purchase consideration be paid by issuing 11% debentures of ₹100 each. Assume debentures have been issued at discount of 20% Identify the number of debentures issued by the company to the vendor.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- 1,225 debentures.
Assets = 98,000
Debenture face value = 100 each
Discount = 20% i.e. ₹20
Issue price = 100-20
= 80
No of debentures issued = Purchase consideration/Issue price
= 98,000/80
= 1,225