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?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- ₹5.
Face value of debenture = ₹100
Premium per debenture = 5%
Premium per debenture = 100 x 5/100
= ₹5