On May 01, 2025 Kaur Ltd. issued 10,000, 8% debentures of Rs. 100 each at a discount of 10% redeemable at a premium of 10%. The issue was fully subscribed and the amount was duly received. Calculate the amount of loss on issue of debentures.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 2,00,000
When debentures are issued at a discount and are redeemable at a premium, the loss on issue of debentures is the discount on issue plus the premium payable on redemption. Both are debited to Loss on Issue of Debentures A/c at the time of issue.
Discount on issue = 10% of Rs. 100 = Rs. 10 per debenture
Premium on redemption = 10% of Rs. 100 = Rs. 10 per debenture
Loss per debenture = Rs. 10 + Rs. 10 = Rs. 20
Loss on 10,000 debentures = 10,000 × Rs. 20 = Rs. 2,00,000
The 8% is the rate of interest on the debentures; it has no part in the loss on issue. Counting only the discount gives Rs. 1,00,000 (Option 1), which leaves out the premium the company has already promised to pay.
Note: This question is from NCERT (2026-27). NTA sets numerical questions from NCERT too, so do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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