Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Issue and Redemption of Debentures

Question:

Based on following case, answer question :

A Ltd issued 2000, 10% debenture of ₹100 each on April 1, 2019 at a discount of 10% redeemable at a premium of 10% after five years. Company purchased assets of the book value of ₹ 2,20,000 from B Ltd. at book value and agreed to make payment of purchase consideration by issuing another 2000, 10% Debentures of ₹100 each at a premium of 10% on above mentioned date only.

On 31st March 2020, Premium on Redemption of Debentures will be shown in Balance Sheet under :

Options:

Shareholder's funds

Other long-term liabilities

Long term provisions

Current liabilities

Correct Answer:

Other long-term liabilities

Explanation:

The correct answer is Option (2) - Other long-term liabilities