Read the following information carefully and answer the question.
A Limited took over assets of ₹3,00,000 and liabilities of ₹10,000 from X and co. Ltd. for an agreed purchase consideration of ₹2,70,000 to be satisfied by issue of 10% debentures of ₹100 each at a premium of 20%. The company also took a loan of ₹10,00,000 from Punjab National Bank and issued 10% debentures of ₹12,00,000 of ₹100 each as collateral security. The rate of Interest on loan is 12% p.a.
Calculate the amount of fixed interest obligation of the company for one year.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹1,42,500
The fixed interest obligation is the interest the company must pay every year whether or not it earns a profit.
Interest on bank loan = 12% of ₹10,00,000 = ₹1,20,000
Debentures issued to the vendor = 2,250 × ₹100 = ₹2,25,000
Interest on these debentures = 10% of ₹2,25,000 = ₹22,500
Debentures issued as collateral security carry no interest, because no liability is created by such an issue; interest is paid only on the loan.
Fixed interest obligation = ₹1,20,000 + ₹22,500 = ₹1,42,500
NCERT (2026-27 edition): |