XYG Company Ltd. purchased assets with a book value of Rs. 99,000 from another firm. It was agreed that purchase consideration should be paid by issuing 11% debentures of Rs. 100 each at a premium of 10%. Calculate the number of debentures to be issued.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → 900
The number of debentures is the purchase consideration divided by the issue price of one debenture, not by its face value. A debenture issued at a premium brings in more than Rs. 100, so fewer are needed to pay the same amount.
Issue price = Rs. 100 + 10% premium = Rs. 110
Number of debentures = Rs. 99,000 / Rs. 110 = 900
The entry: Vendors Dr. Rs. 99,000; To 11% Debentures A/c Rs. 90,000 (900 × Rs. 100); To Securities Premium Reserve A/c Rs. 9,000 (900 × Rs. 10). Dividing by the face value gives 990, which is the at-par case, not this one.
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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