Debentures issued for consideration other than cash includes, debentu…

Debentures issued for consideration other than cash includes, debentures:

(A) Issued to bank as additional security
(B) Issued to vendor
(C) Issued to Public
(D) Issued to creditor
(E) Issued for cash

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A), (B) and (D) only

Debentures are issued for consideration other than cash when the company gets something other than money for them:

(A) Issued to bank as additional security — True. These debentures back a loan as collateral; the company receives no cash for them.
(B) Issued to vendor — True. The vendor gets debentures instead of cash for the assets bought.
(C) Issued to Public — False. The public pays cash on application and allotment.
(D) Issued to creditor — True. The creditor accepts debentures in settlement of his dues instead of cash.
(E) Issued for cash — False. This is the very opposite of consideration other than cash.

NCERT (2026-27 edition):
Issue of Debentures for Consideration other than Cash – “Sometimes a company purchased assets from vendors and instead of making payment in cash issues debentures for consideration thereof. Such issue of debentures is called debentures issued for consideration other than cash.”

NCERT (2026-27 edition):
Issue of Debentures as a Collateral Security – “… In such situation, the company may issue its own debentures to the lenders in addition to some other assets already pledged. Such an issue of debentures is known as ‘Debentures issued as Collateral Security’.”

NCERT (2026-27 edition):
Issue of Debentures – “The procedure for the issue of debentures is the same as that for the issue of shares. The intending investors apply for debentures on the basis of the prospectus issued by the company. The company may either ask for the entire amount to be paid on application or by means of instalments on application, on allotment and on various calls.”