X Ltd. issued 2,000, 10% debentures of Rs. 100 each at a discount of 8% on April 1, 2025. These debentures are redeemable at par after ten years. The company has a balance in Securities Premium Reserve of Rs. 15,000. Calculate the amount of discount to be written off from the Securities Premium Reserve.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 15,000
Discount on issue of debentures is a capital loss. It is written off first from the Securities Premium Reserve, but only up to the balance in that reserve; anything left is written off against the Statement of Profit and Loss.
Discount on issue = 2,000 × Rs. 100 × 8% = Rs. 16,000
Balance in Securities Premium Reserve = Rs. 15,000
Written off from the reserve = Rs. 15,000, the whole balance
Remaining Rs. 1,000 = written off against the Statement of Profit and Loss
The ten-year redemption period plays no part, because the whole discount is written off in the year of issue. In the book’s version the reserve was Rs. 30,000, large enough to absorb the full Rs. 16,000; NTA cut it to Rs. 15,000 so that the limit of the reserve decides the answer.
Note: NTA picked this question from an NCERT (2026-27) Do it Yourself exercise and changed the figures. Do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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