Read the following passage and answer the question.
To meet the requirements of funds for starting a new factory, the company issued 50,000, 10% debentures of र10 each and 2,000, 8% debentures of र100 each to the vendor of the machinery purchased for र7,00,000.
Where would the Debentures issued to the vendor of machinery be classified?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Issue of debentures for consideration other than cash.
The debentures issued to the vendor of machinery for the purchase of the machinery would be classified as Issue of debentures for consideration other than cash.
This is because the debentures are being issued not in exchange for cash but as part of the payment for the machinery. Such an issuance is considered a non-cash transaction and is recorded as a consideration other than cash in the company's financial records.