Which of the following statement related to Discount/Loss on Issue of…

The correct answer is Option (4) → Discount or loss is a revenue loss of the company

Discount or loss on issue of debentures arises from raising long-term funds, not from the day-to-day business. That is why the book treats it as a capital loss, written off first against capital profits such as securities premium. Calling it a revenue loss is the one statement that is wrong.

Option (1) Discount or loss can be written-off from securities premium account — A true statement. Securities premium is a capital profit, and the Act allows this loss to be written off against it.

Option (2) If there are no capital profits or the capital profits are not adequate, the amount of such discount/loss can be written-off against the revenue profits every year — A true statement. Revenue profits are used only when capital profits are not enough.

Option (3) Discount or loss is a capital loss of the company — A true statement. This is how the book classifies it, which is why Option (4) is the incorrect one.