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 2000, 10% Debentures of ₹100 each at a premium of 10% on above mentioned date only.
Calculate interest on Debenture for the year 2019-20 from the above-given information.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹40,000.
Debentures = 4,000 of ₹100 each
Interest rate = 10%
Interest on debentures = 4,00,000 x 10/100
= ₹40,000