Accountancy Part AIssue and Redemption of Debentures

Debentures are issued at a discount. In which of the following the di…

Debentures are issued at a discount. In which of the following the difference between their nominal value and the issue price is treated as the amount of interest:

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Zero Coupon Rate Debentures

NCERT (2026-27 edition):
From Coupon Rate Point of view – “… Zero Coupon Rate Debentures: These debentures do not carry a specific rate of interest. In order to compensate the investors, such debentures are issued at substantial discount and the difference between the nominal value and the issue price is treated as the amount of interest related to the duration of the debentures.”