To meet the requirements of funds for starting a new factory, the company issued 50,000, 10% debentures of र10 each and 2000, 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?

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 is called debentures issued for consideration other than cash. In that case also, the debentures may be issued at par, at a premium or at a discount then entries made in such a situation are similar to those of the shares issued for consideration other than cash.