A Company issued ₹1,00,000, 9% Debentures of ₹100 each at a discount of 5% but redeemable at premium of 5%. The total amount received on such debenture is:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹95,000
Face value of debentures issued = ₹1,00,000
Less: discount on issue 5% = ₹5,000
Amount received = ₹95,000
The 5% premium is payable only at redemption; at issue it is recorded as a liability (Premium on Redemption of Debentures A/c) together with the discount in Loss on Issue of Debentures A/c, but no cash is received for it.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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