There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.
Assertion (A): The 'discount on debentures issuance is charged to 'Securities Premium Account' and is reflected as an asset.
Reason (R): The 'discount on debentures' issuance is noted as a capital loss on the asset side as a fictitious asset. Hence, has to be written off during the year of its issue.
Answer & explanation
Correct answer: option 1
The 'discount on debentures' issuance is noted as a capital loss and is charged to 'Securities Premium Account' and is reflected on the asset side as a fictitious asset. Hence, has to be written off during the year of its issue.