Read the following information carefully and answer the question.
A Limited took over assets of ₹3,00,000 and liabilities of ₹10,000 from X and co. Ltd. for an agreed purchase consideration of ₹2,70,000 to be satisfied by issue of 10% debentures of ₹100 each at a premium of 20%. The company also took a loan of ₹10,00,000 from Punjab National Bank and issued 10% debentures of ₹12,00,000 of ₹100 each as collateral security. The rate of Interest on loan is 12% p.a.
Loan taken by A Ltd from Punjab National Bank will be classified under following head.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Non current Liabilities
A bank loan repayable after more than twelve months is a long-term borrowing, shown under Non-current Liabilities. The debentures given to the bank as collateral security create no separate liability; they are only noted below the loan.
Option (1) Shareholder's fund — Incorrect. Shareholders’ funds are the owners’ money (share capital and reserves); a bank loan is borrowed money.
Option (2) Current Liabilities — Incorrect. Only loans repayable within twelve months (or the operating cycle) are current.
Option (4) Non current Assets — Incorrect. A loan taken is an obligation of the company, not something it owns.
NCERT (2026-27 edition):
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