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

Assertion (A):  Redemption of Debentures does not affect the Current Ratio of the company in any case.
Reason (R): Redemption of Debentures affects the Current Ratio because Debentures that are redeemable within 12 months or within the period of the Operating Cycle from the date of Balance Sheet are shown as Current Liabilities. Redemption of such Debentures reduces Current Liabilities.

Assertion (A) is not correct but the Reason (R) is correct

The correct answer is option 3- Assertion (A) is not correct but the Reason (R) is correct.

Assertion (A):  Redemption of Debentures does not affect the Current Ratio of the company in any case. THIS IS FALSE. The redemption of debentures can affect the current ratio if it involves a reduction in current liabilities. Specifically, redeeming debentures that are classified as current liabilities will reduce current liabilities, which can change the current ratio. 

Reason (R): Redemption of Debentures affects the Current Ratio because Debentures that are redeemable within 12 months or within the period of the Operating Cycle from the date of Balance Sheet are shown as Current Liabilities. Redemption of such Debentures reduces Current Liabilities. THIS IS TRUE. Debentures due for redemption within 12 months or within the operating cycle are classified as current liabilities. When such debentures are redeemed, current liabilities are reduced, which affects the current ratio.

THUS, ASSERTION IS NOT TRUE BUT REASON IS TRUE.

** Redemption of debentures refers to the repayment of these debentures by the company to the debenture holders. So the company will discharge its liability and remove it from the balance sheet. This is a major transaction for the company since the amount of money involved tends to be quite significant. Debentures that are redeemable within 12 months or within the period of the Operating Cycle from the date of Balance Sheet are shown as Current Liabilities. Redemption of such Debentures reduces Current Liabilities and affect the current ratio of the company.