Debentures of ₹5,00,000 were redeemed at 10% premium. Premium on redemption of debentures was provided out of Securities Premium.
Determine Cash Outflow of Financing Activities.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹5,50,000
Face value of debentures redeemed = ₹5,00,000
Premium on redemption = 10% of ₹5,00,000 = ₹50,000
Cash paid to debenture holders = ₹5,00,000 + ₹50,000 = ₹5,50,000 (financing outflow)
Providing the premium out of Securities Premium is only a transfer between accounts; it involves no cash.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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