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
When debentures are issued to a vendor in full satisfaction of the purchase consideration, the number issued is the purchase consideration divided by the issue price of one debenture, not by its face value.
Face value = Rs. 100; discount 20% = Rs. 20
Issue price = Rs. 100 − Rs. 20 = Rs. 80
Number of debentures = Rs. 98,000 ÷ Rs. 80 = 1,225
Dividing by the face value gives 980 debentures, which is not an option; the discount means the vendor needs more debentures to receive the same value.
NCERT (2026-27 edition):
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