Based on following information answer question:
Apex Ltd. issued to public ₹10,00,000, 10% Debentures of ₹100 each at par, redeemable at a premium of 20%. It also issued 10,000, 11% Debentures of ₹100 each as collateral security against a bank loan of ₹8,00,000.
The company bought building worth ₹50,00,000 from Beta Ltd. against a cheque of ₹20,00,000 and balance by issue of 12% Debentures of ₹100 each at a premium of 20%.
Which of the following cannot be considered as issue of debentures for consideration other than cash?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Issue of Debentures to Public
Debentures are issued for consideration other than cash when the company receives an asset or a service instead of money. Debentures offered to the public are paid for in cash (application and allotment money), so that is an ordinary issue for cash.
Option (1) Issue of Debentures to vendor of fixed assets bought on credit — a case of consideration other than cash: the vendor is paid with debentures instead of cash for the assets supplied.
Option (2) Issue of Debentures to Underwriters — a case of consideration other than cash: the debentures settle the underwriting commission, a service received by the company.
Option (3) Issue of Debentures to Promoters — a case of consideration other than cash: the debentures pay the promoters for their services in forming the company.
NCERT (2026-27 edition): |