Which of the following statements are true?(A) Debentures cannot be i…

The correct answer is Option (3) → (B) and (D) only

The statements test how debentures may be issued, what a collateral issue means and what redemption costs the company.

(A) Debentures cannot be issued for consideration other than cash. Incorrect. A company can issue debentures to a vendor in payment for assets or a business bought, without any cash changing hands.

(B) Interest is not paid on the debentures issued as collateral security. Correct. A collateral security is a subsidiary or secondary or additional security besides the primary security. The loan itself carries the interest; the debentures only back it up, so no liability and no interest arise on them unless the loan is not repaid.

(C) Convertible Debentures will be redeemed by paying cash to the debenture holders. Incorrect. Convertible debentures are meant to be turned into shares, so they are settled by issuing shares, not by paying cash.

(D) Premium on redemption of debentures is a loss for the company. Correct. The company repays more than the face value, and the extra is debited to Loss on Issue of Debentures at the time of issue and written off.