If debentures are converted into equity shares, it is a/an.....................
Answer & explanation
Correct answer: option 2
The correct answer is option 2- No flow of cash.
If debentures are converted into equity shares, it is a No flow of cash.
As per AS-3, investing and financing transactions that do not require the use of cash or cash equivalents should be excluded from a cash flow statement. Examples of such transactions are – acquisition of machinery by issue of equity shares or redemption of debentures by issue of equity shares. Such transactions should be disclosed elsewhere in the financial statements in a way that provide all the relevant information about these investing and financing activities.