There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.

Assertion (A):  A company issued 15% 10,000 debentures at par @ ₹100 per debenture. The company suffered a loss but still, the directors of the company paid interest on debentures.
Reason (R): Interest on debenture is a charge against profits and therefore, its payment is not subject to the earning of profit.

The correct answer is option 1- Both (A) and (R) are true, but (R) is the correct explanation of (A).

Assertion (A):  A company issued 15% 10,000 debentures at par @ ₹100 per debenture. The  company suffered a loss but still, the directors of the company paid interest on debentures. THIS IS TRUE.
Reason (R): Interest on debenture is a charge against profits and therefore, its payment is not subject to the earning of profit. THIS IS TRUE.

Interest on debentures is a fixed financial obligation for a company, and it must be paid to debenture holders regardless of whether the company has earned a profit or not. This interest expense is considered a financial cost, and companies are legally obligated to make these interest payments to their debenture holders according to the terms and conditions specified in the debenture agreements. It is a priority payment and takes precedence over profit distribution to shareholders because debenture holders are creditors and have a contractual right to receive their interest payments. Failure to pay interest on debentures can lead to default and legal consequences. Thus, both statements are true and reason explain why assertion is true.