A Ltd issued 20,000 10% debentures of ₹100 each at a discount of 5% on April 01, 2022 which are redeemable at 10% premium. It has sufficient balance of Securities Premium Reserve. Calculate the amount to be written off from Securities Premium Reserve
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹3,00,000
Debentures issued at a discount and redeemable at a premium give a loss on issue made of both parts. This capital loss is written off first from Securities Premium Reserve, which here is sufficient.
Nominal value = 20,000 × ₹100 = ₹20,00,000
Discount on issue = 5% of ₹20,00,000 = ₹1,00,000
Premium on redemption = 10% of ₹20,00,000 = ₹2,00,000
Loss on issue = ₹1,00,000 + ₹2,00,000 = ₹3,00,000, written off from Securities Premium Reserve.
NCERT (2026-27 edition): NCERT (2026-27 edition):
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