Read the following passage and answer the following question.
ABC Ltd. took over Assets of ₹6,00,000 and Liabilities of ₹40,000 of XYZ Ltd. at an agreed value of ₹6,30,000. ABC Ltd. issued 10% Debentures of ₹100 each at a discount of 10% to XYZ Ltd. in full satisfaction of the purchase price. ABC Ltd. writes off any capital losses incurred during a year, at the end of that financial year.
How much discount was given to XYZ Ltd on the issue of debentures?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹70,000.
Nominal value of debenture = ₹100
Discount is 10% i.e. 100 X 10/100
= ₹10
Issue price = 100-10
= ₹90
No of debenture issued = Purchase consideration/ issue price
= 6,30,000/90
= 7,000
Discount = 7000 X 10
= ₹70,000