Practicing Success
Read the following passage and answer the following question. ABC Ltd. issued 20,000, 6% debentures of ₹100 each at a discount of 4% redeemable at a premium of 5% after 3 years from 1st April 2017. The amount payable on the application is ₹50 and the balance on the allotment. The company has a balance of ₹50,000 in securities premium reserve and ₹1,00,000 in the capital reserve. Profit earned by the company in the year is ₹75,000. |
What is the premium on redemption per debenture? |
₹4 ₹5 ₹6 ₹8 |
₹5 |
The correct answer is option 2- ₹5. Face value of debenture = ₹100 |