XYG Company Ltd. purchased assets with a book value of Rs. 99,000 from another firm. It was agreed that purchase consideration should be paid by issuing 11% debentures of Rs. 100 each at a premium of 10%. Calculate the number of debentures to be issued.
Answer & explanation
Correct answer: option 1
Correct answer: Option (1) → 900
Concept: Number of debentures to be issued = Purchase consideration / Issue price per debenture, where the issue price includes any premium – per Issue and Redemption of Debentures.
Issue price per debenture = Rs 100 + 10% premium = Rs 110.
Purchase consideration = Rs 99,000.
Number of debentures = 99,000 / 110 = 900.