Accountancy Part AIssue and Redemption of Debentures

Debentures can be issued at: (A) Par (B) Premium (C) Discount (D) Tra…

Debentures can be issued at:

(A) Par

(B) Premium

(D) Transaction value

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A), (B) and (C) only

The issue price of a debenture is compared with its face value: equal, more or less.

(A) Par Correct. The issue price equals the face value.

(B) Premium Correct. The issue price is more than the face value; the excess goes to Securities Premium.

(C) Discount Correct. The issue price is less than the face value; the shortfall is a capital loss written off later.

(D) Transaction value Incorrect. It is not one of the prices at which debentures are issued; every issue is at par, at a premium or at a discount.

Note: In the original question, both Option (2) and Option (3) were correct as per the NTA Answer Key. The paper printed Option (2) as (A), (B) and (C) only and Option (3) as (A), (B), (C) and (D). For the benefit of students and to ensure a single answer, Option (3) has been changed to (A) and (B) only.

NCERT (2026-27 edition):
Issue of Debentures – “The procedure for the issue of debentures is the same as that for the issue of shares. The intending investors apply for debentures on the basis of the prospectus issued by the company. The company may either ask for the entire amount to be paid on application or by means of instalments on application, on allotment and on various calls. Debentures can be issued at par, at a premium or at a discount.”