When Debentures are issued at par and are redeemable at a premium, the Loss on such an issue is debited to :

Loss on issue of Debentures A/c

The correct answer is option (2) : Loss on issue of Debentures A/c.

* When debentures are redeemable at a premium, the premium payable on redemption is debited to ‘Loss on Issue of Debentures A/c’.

* Premium on redemption is a liability of a company payable in future. It is a provision and is shown under the head Non-current liabilities under sub-head ‘Long-term Borrowings’ until debentures are redeemed.