When debentures are issued at discount and redeemable at a premium, ___________ account will be _________ for combined capital loss of issue and redemption of debentures.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Loss on issue of Debentures, Debited
Debentures issued at a discount and redeemable at a premium cost the company twice: the discount now and the premium later. Both are capital losses, so they are put together in one account, which is debited at the time of issue and written off over the life of the debentures.
Why the other options are incorrect
Option (1) Discount on issue of Debentures, Credited — Incorrect. A discount is a loss and is never credited; when redemption is at a premium it is taken into Loss on Issue of Debentures.
Option (3) Premium on issue of Debentures, Debited — Incorrect. A premium on issue is a gain, credited to Securities Premium, and is never debited.
Option (4) Premium on issue of Debentures, Credited — Incorrect. There is no premium on issue here; the debentures were issued at a discount.
NCERT (2026-27 edition): |