Which of the following will be included in case debenture's are issued to vendor at a discount for purchase consideration other than cash?
(A) % Debenture A/c is credited
(B) Vendor A/c is debited
(C) Discount on issue of Debenture A/c is debited
(D) Securities Premium Reserve A/c is credited
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A), (B) and (C) only
When debentures are issued to a vendor at a discount, the vendor is discharged for the issue price, the discount is a loss to the company, and the debentures are recorded at their full face value.
Vendor A/c Dr. (issue price)
Discount on Issue of Debentures A/c Dr. (discount)
To % Debentures A/c (face value)
(A) % Debenture A/c is credited — Correct. The debentures are a liability and are credited at face value.
(B) Vendor A/c is debited — Correct. The amount payable to the vendor is settled by the issue, so his account is debited.
(C) Discount on issue of Debenture A/c is debited — Correct. The difference between face value and issue price is a capital loss, debited to this account.
(D) Securities Premium Reserve A/c is credited — Incorrect. Securities Premium is credited only when debentures are issued above face value; an issue at a discount has no premium.
NCERT (2026-27 edition):
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