The correct answer is Option (1) - (A)-(III), (B)-(IV), (C)-(II), (D)-(I)
* Debenture Suspense account- Collateral Security.
Sometimes the issue of debentures as collateral security is shown by making the following journal entry:
Debenture Suspense A/c Dr.
To Debentures A/c
* Current maturities of Debts- Other Current liabilities.
Current maturities to long-term loan include amount repayable within twelve months/operating cycle under other current liabilities with Note to Account.
* Discount on Issue of Debentures- Statement of Profit & Loss.
Discount or Loss on issue of debentures is a capital loss and is written-off in the year when debentures are issued. Discount or loss can be written-off from securities premium reserve [section 52(2)]. In case, capital profit do not exist or are inadequate, the amount should be written off against revenue profits of the year. The journal entry passed is—
Securities Premium Reserve A/c Dr. [If exists to the extent of balance]
Statement of Profit and Loss Dr.
To Discount/Loss on Issue of Debentures A/c
(Discount/Loss on issue of debentures written-off)
* Interest on Debentures- Charge against profit
When a company issues debentures, it is under an obligation to pay interest thereon at fixed percentage (half yearly) periodically until debentures are repaid. This percentage is usually as part of the name of debentures like 8% debentures, 10% debentures, etc., and interest payable is calculated at the nominal value of debentures. Interest on debenture is a charge against the profit of the company and must be paid whether the company has earned any profit or not. According to Income Tax Act, 1961, a company must deduct income tax at a prescribed rate from the interest payable on debentures if it exceeds the prescribed limit. It is called Tax Deducted at Source (TDS) and is to be deposited with the tax authorities. Of course, the debenture holders can adjust this amount against the tax due from them. | 
