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CHAPTER – 4
REDEMPTION OF DEBENTURES

TABLE OF CONTENTS
1. Meaning of Debentures 2. Distinction between Shareholder & Deb’holder
3. Type of Debentures 4. Accounting of Debentures – An Overview
5. Accounting of Issue of Debentures 6. Debenture Redemption Reserve
7. Interest on Debentures 8. Investment in ‘Own Debentures’
9. Practical Problems

1. MEANING OF DEBENTURES

The word debentures is derived from the latin word “Debere” which means ‘To owe a Debt’. It is an
acknowledgement of an amount lent to the company on which the company is obliged to pay a fixed amount of
return. Section 2(30) of the Companies Act 2013 defines Debentures as, “debenture’ includes debenture
stock, bonds and any other securities of a company, whether constituting a charge on the assets of the
company or not”.
A debenture can be defined as a bond issued by the company under it’s common seal, accepting the debt and
containing the provisions as regards repayment of principle and interest.
CAPITAL STRUCTURE OF COMPANY

OWN CAPITAL BORROWED CAPITAL

2. DISTINCTION BETWEEN SHAREHOLDER AND DEBENTUREHOLDER

POINT OF
SHAREHOLDER DEBENTUREHOLDER
DIFFERENCE
Each shareholder is the proportionate owner Relation with The Debentureholder is merely a creditor of
of the company. Co. the company.
Return on shares is known as Dividend. Return Return on Debentures is known as Interest.
The debentureholders don’t have any voting
The shareholders enjoy the voting rights Voting Rights
rights
The shareholder don’t get a fixed amount of The debentureholders do get a fixed
Fixed Return
dividend. percentage of interest
In case of liquidation of company they are Priority of In case of liquidation they are paid the
paid last Repayment amount in priority to the shareholders
4. 1

Usually the shareholder’s capital is lifelong The debentures are usually redeemed after
Life
capital for the company expiry of the stipulated time

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3. TYPES OF DEBENTURES

4. ACCOUNTING OF DEBENTURES – AN OVERVIEW

ACCOUNTING OF DEBENTURES

Accounting of Accounting of
‘ISSUE OF DEBENTURES’ ‘REDEMPTION OF DEBENTURES’

Issue for Cash Consideration

Issue for Non-Cash Consideration
Issue against Loan as Collateral
Security

Redemption out of Redemption by

‘PROFITS’ ‘CONVERSION’

Lumpsum Redemption
Redemption in Installments
Purchase of Own-Debentures on Open Market

Section-71
Debenture Redemption
4. 2

Reserve (DRR)

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5. ACCOUNTING OF ISSUE OF DEBENTURES

NOTE: Accounting of Issue of Debentures is covered extensively at CA-Foundation Level. But, still
following entries are given for Revision purpose. Since, a question may comprise of transaction on issue of
debentures and a student is supposed to pass those entries as well.
The following are the detailed entries in each of the following cases:
1. ISSUE OF DEBENTURES FOR CASH (FOR RAISING FINANCE):
SR.
TRANSACTION DETAILS ACCOUNTING ENTRY
NO.
1. Application money received - Bank A/c. ……... Dr.
To Debenture Application A/c.
2. Allotment of Debentures at par Debenture Application A/c. ……... Dr.
Debenture Allotment A/c. ……... Dr.
To Debentures A/c.
at premium Debenture Application A/c. ……... Dr.
Debenture Allotment A/c. ……... Dr.
To Debentures A/c.
To Securities Premium A/c.
at discount Debenture Application A/c. ……... Dr.
Debenture Allotment A/c. ……... Dr.
Discount on issue of Debentures A/c…
Dr.
To Debentures A/c.
3. Refund of excess Debenture Application A/c. ……... Dr.
Application money or To Bank A/c.
Refund due to non
allotment of Debentures
4. Appropriation of excess Debenture Application A/c. ……... Dr.
Application money towards To Debenture Allotment A/c.
Allotment money due or To Debentures Call A/c.
transfer to Calls in Advance
5. Allotment money received Bank A/c. ……... Dr.
To Debenture Allotment A/c.
6. Call money due issue at par, Debenture Call A/c. ……... Dr.
discount or To Debentures A/c.
premium included
in Application Debentures Call A/c. ……... Dr.
money To Debentures A/c.
premium included To Securities Premium A/c.
in Call money
7. Call money received - Bank A/c. ……... Dr.
4. 3

To Debentures Call A/c.

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2. ISSUE OF DEBENTURES FOR CONSIDERATION OTHER THAN CASH:
SR.
TRANSACTION ACCOUNTING ENTRY
NO.
1. Purchase Consideration due Respective Assets A/c. ……... Dr.
To Respective Liability A/c.
To Vendor A/c.
2. Discharge of amount due by Vendor A/c. ……... Dr.
issue of debentures Discount on issue of Debentures A/c. ……... Dr.
To Debentures A/c.
To Securities Premium A/c.

3. ISSUE OF DEBENTURES AS A COLLATERAL (ADDITIONAL) SECURITY AGAINST A LOAN:

If debentures are issued as additional security against a loan, loan would appear as liability. The
debentures issued are shown only within brackets below the loan to indicate that they are issued only as
security and the amount is not shown in the outer column.
Balance Sheet of …………………….. Ltd. as on ……………………...
Liabilities Rs. Assets Rs.
Secured Loans:
Bank Overdraft 75,000
(Secured by issue of 800, 9% Debentures
of Rs. 100/- each as collateral security)

Alternatively, a Suspense Account is debited with the amount of debentures issued as additional security
and the amount credited to the Debentures Account. On the repayment of loan the entries will be reversed.
No interest will be payable on such debentures.
SR.
TRANSACTION ACCOUNTING ENTRY
NO.
1. Contra Entry passed Debentures Suspence A/c. …... Dr. 80,000
To Debentures A/c. 80,000
(Being issue of 800, 9% Debentures of Rs. 100/- each as collateral
security for Bank Overdraft of Rs. 75,000/-).

Balance Sheet of …………………….. Ltd. as on ……………………..

Liabilities Rs. Assets Rs.
Secured Loans:
Bank Overdraft 75,000 Miscellaneous Expenses:
(Secured by issue of 800, 9% Debentures Debenture Suspence A/c. 80,000
of Rs. 100/- each as collateral security) (as per contra)
800, 9% Debentures of Rs. 100/- each,
issued as collateral security(as per contra) 80,000
Important Points:
1. The debentures are usually prefixed with the rate of interest i.e. 8% Debentures.
4. 4

2. If the entire amount due on debentures is called on Application, the amount is credited to
‘Debenture Application and Allotment Account’.

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6. DEBENTURE REDEMPTION RESERVE

Section-71
Debenture Redemption Reserve (DRR)

Meaning & Adequacy Utilisation DRR Balance in

Creation of DRR of DRR Investment DRR
of DRR After
Redemption
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As per Rule 18 (7) of the Companies (Share Capital and Debentures) Amendment Rules, 2019, the
company shall comply with the requirements with regard to Debenture Redemption Reserve (DRR) and
investment or deposit of sum in respect of debentures maturing during the year ending on the 31st day of
March of next year in accordance with the conditions given below-
(a) The Debenture Redemption Reserve shall be created out of the profits of the company available for
payment of dividend;
(b) The limits with respect to adequacy of DRR and investment or deposits, as the case may be, shall be as under:

ADEQUACY OF DEBENTURE
ISSUING COMPANIES
REDEMPTION RESERVE (DRR)
(i) All India Financial Institutions (AIFIs) regulated by No DRR is required
Reserve Bank of India and Banking Companies for
both public as well as privately placed debentures
(ii) For other Financial Institutions (FIs) within the DRR will be as applicable to NBFCs registered
meaning of clause (72) of section 2 of the Companies with RBI (as per iii below).
Act, 2013
(iii) For LISTED COMPANIES (other than AIFIs and Banking Companies as specified in Sr. No. 1 above):
(a) All listed NBFCs (registered with RBI under section No DRR is required
45-IA of the RBI Act,) and listed HFCs ( Housing
Finance Companies registered with National
Housing Bank) for both public as well as privately
placed debentures
(b) Other listed companies for both public as well as No DRR is required
privately placed debentures.
4. 6

(iv) For UNLISTED COMPANIES (other than AIFIs and Banking Companies as specified in Sr. No. 1 above

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(a) All unlisted NBFCs (registered with RBI under No DRR is required
section 45-IA of the RBI (Amendment) Act, 1997) and
unlisted HFCs (Housing Finance Companies
registered with National Housing Bank)for privately
placed debentures
(b) Other Unlisted Companies DRR shall be 10% of the value of the
outstanding debentures issued.

7. INTEREST ON DEBENTURE

Interest on debentures at fixed rate is paid after fixed intervals (usually Half yearly).
Accounting Entry: Interest on Debentures A/c. …..Dr.
To Tax Deducted at Source A/c.
To Bank A/c.
If the interest payment date does not coincide with the year ending date, the company has to provide for accrued
interest for the period from last interest payment date till the year ending date. Similarly, provision is also
necessary for interest due but not paid.
Accounting Entry: Interest on Debentures A/c. …..Dr.
To Interest accrued but not due on Debentures A/c.
To Interest accrued and due on Debentures A/c.
‘Interest accrued but not due‘ is shown on the liability side of the Balance Sheet under the head ‘Current
Liabilities’ and ‘Interest accrued and due‘ is also shown under the head ‘Current Liabilities'. In the subsequent
year either the entry is reversed or payment of interest relating to earlier is debited to ‘Interest Accrued A/c'.
Please keep in mind that the company should pay interest on debentures before redemption/cancellation.

8. INVESTMENT IN ‘OWN DEBENTURE’

The company may purchase its own debentures in the open market if available at below Redemption value. This
however should be in conformity with the Debenture Trust Deed or agreement with the debentureholders. The
debentures thus purchased may be:
i. held as general investment (thereby save interest on Debentures)
ii. cancelled immediately or subsequently (thereby reduce the burden of liability and save interest on
Debentures)
iii. sold in the market (thereby profit can be earned)
iv. held as Sinking Fund Investments
The debentures may be purchased either at cum-interest price or Ex-interest price.
Cum-Interest Price = Ex-Interest Price + Interest
Ex-Interest Price = Cum-Interest Price - Interest
Interest = Cum-Interest Price - Ex-Interest Price

Cum-Interest price is inclusive of interest accrued, while Ex-Interest price is exclusive of interest accrued and
hence additional payment of interest is made by the buyer to the seller.
SR.
4. 7

TRANSACTIONS ACCOUNTING ENTRIES

NO.
1. Purchase of Debentures Own Debentures A/c... Dr.

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SR.
TRANSACTIONS ACCOUNTING ENTRIES
NO.
(Ex-Interest Price)
Interest on Debentures A/c... Dr.
To Bank A/c.
(Cum-Interest Price)
2. Sale of own Debentures
i. Sales Bank A/c... Dr.
(Cum-Interest Price)
To Own Debentures A/c.
(Ex-Interest Price)
To Interest on Debentures A/c.

ii. Profit on sale Own Debentures A/c... Dr.

To Capital Reserve A/c.
(Ex Interest Selling Price - Ex Interest
Purchase Price)
3. Cancellation of Debentures
i. Transfer of face value Debentures A/c... Dr.
To Own Debentures A/c.
ii. Profit on cancellation Own Debentures A/c... Dr.
To Capital Reserve A/c.
4. Interest saved on own debentures from the date of Interest on Debentures A/c... Dr.
Purchase to the date of sale/cancellation To Interest Saved A/c.

Notes:
1. Profit on Cancellation of Own Debentures should be transferred to 'Capital Reserve Account'.
3. If own debentures are purchased for immediate cancellation, the entries may be routed through Debenture
Redemption Account instead of Own Debentures Account.
4. On Due date / record date, payment of interest is made only on debentures held by outsiders.
5. If year ending date and record date does not match / coincide, then we account for interest accrued but
not due, w.r.t. Debentures held by outsiders.
6. Interest saved is calculated from date of Purchase of own Debentures / Beginning of the year (as the case
may be) till cancellation of own debentures sales of own Debentures / year end (as the case may be).
7. Effective interest accounted in P&L is calculated w.r.t. Debentures held by outsiders and time period of
holding such debentures.
8. If date of cancellation of own debentures is not given assume it is cancelled immediately.
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4. 8

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9. PRACTICAL PROBLEMS

IN-CLASSROOM PROBLEMS PRACTISE PROBLEMS SELF-ASSESSMENT PROBLEMS

Essentials Growth Maturity

Q1. Right and Bonus Issue, Red. of Debentures REG. PAGE NO.
The Summary Balance Sheet of BEE Co. Ltd. (unlisted company other than AIFI, Banking company, NBFC
and HFC) on 31st March, 2001 read as under:
Liabilities Rs. Assets Rs.
Share Capital: Freehold property 1,15,000
Authorised: Stock 1,35,000
30,000 Equity Shares of Rs. 10 each 3,00,000 Trade receivables 75,000
Issued and Subscribed: Cash 30,000
20,000 Equity Shares of Rs. 10 each Balance at Bank 2,00,000
fully paid 2,00,000
Profit and Loss Account 1,20,000
12% Debentures 1,20,000
Trade payables 1,15,000 ___________
5,55,500 5,55,000
At the Annual General Meeting it was resolved:
(a) To give existing shareholders the option to purchase one Rs. 10 share at Rs. 15 for every four shares
(held prior to the bonus distribution), this option being taken up by all shareholders.
(b) To issue one bonus share for every four shares held.
(c) To repay the debentures at a premium of 3%.
Give the necessary journal entries and the company’s Balance Sheet after these transactions are completed.

Q2. Basic Question REG. PAGE NO.

A Company had issued 20,000, 13% Convertible debentures of Rs. 100 each on 1st April, 2019. The
debentures are due for redemption on 1st July, 2020. The terms of issue of debentures provided that they
were redeemable at a premium of 5% and also conferred option to the debentureholders to convert 20%
of their holding into equity shares (Nominal value Rs.10) at a price of Rs.15 per share. Debentureholders
holding 2,500 debentures did not exercise the option. Calculate the number of equity shares to be allotted
to the Debentureholders exercising the option to the maximum.

Q3. Partly Convertible Debentures REG. PAGE NO.

Libra Limited recently made a public issue in respect of which the following information is available:
(a) No. of partly convertible debentures issued - 2,00,000; face value and issue price Rs. 100 per
debenture.
(b) Convertible portion per debenture- 60%, date of conversion- on expiry of 6 months from the date of
closing of issue.
(c) Date of closure of subscription lists - 1.5.2019, date of allotment - 1.6.2019, rate of interest on
debenture - 15% payable from the date of allotment, value of equity share for the purpose of
conversion - Rs. 60 (Face Value Rs. 10).
4. 9

(d) Underwriting Commission - 2%.

(e) No. of debentures applied for - 1,50,000.

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(f) Interest payable on debentures half-yearly on 30th September and 31st March.
Write relevant journal entries for all transactions arising out of the above during the year ended 31 st
March, 2020 (including cash and bank entries).

Q4. Basic Question on Redemption REG. PAGE NO.

The summarised Balance Sheet of Convertible Limited (unlisted company other than AIFI, Banking
company, NBFC and HFC), as on 30th June, 2001, stood as follows:
Liabilities: Rs.
Share Capital : 5,00,000 equity shares of Rs. 10 each fully paid 50,00,000
General Reserve 90,00,000
Profit & Loss Account 10,00,000
Debenture Redemption Reserve 10,00,000
13.5% Convertible Debentures, 1,00,000 Debentures of Rs. 100 each 1,00,00,000
Other loans 65,00,000
Current Liabilities and Provisions 1,25,00,000
4,50,00,000
Assets:
Fixed Assets (at cost less depreciation) 1,60,00,000
Debenture Redemption Reserve Investments 15,00,000
Cash and bank Balances 75,00,000
Other Current Assets 2,00,00,000
4,50,00,000
The debentures are due for redemption on 1st July, 2001. The terms of issue of debentures provided that
they were redeemable at a premium 5% and also conferred option to the debenture holders to convert
20% of their holding into equity shares at a predetermined price of Rs. 15.75 per share and the payment
in cash.
Assuming that:
(i) except for 100 debenture holders holding totally 25,000 debentures, the rest of them exercised the
option for maximum conversion.
(ii) the investments were realised at par on sale; and
(iii) all the transactions are put through, without any lag, on 1st July, 2001.
Redraft the balance sheet of the company as on 1st July, 2001 after giving effect to the redemption. Show
your calculations in respect of the number of equity shares to be allotted and the cash payment necessary.

Q5. Purchase of Own Deb. From Open Market for cancellation REG. PAGE NO.
On January 1, Rama Ltd. (listed company) had 500 Debentures of Rs. 100 each outstanding in its books
carrying interest at 6% per annum. In accordance with the regulatory requirements, the directors
acquired debentures from the open market for immediate cancellation as follows:
March 1 Rs. 5,000 at Rs. 98.00 (cum interest)
Aug. 1 Rs. 10,000 at Rs. 100.25 (cum interest)
Dec. 15 Rs. 2,500 at Rs. 98.50 (ex-interest)
Debenture interest is payable half-yearly, on 30th June and 31st Dec. Pass Journal Entries & also show
ledger accounts of Debentures, Debenture interest and profit or loss on cancellation, ignoring income-tax.
4. 10

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Q6. Own Debentures - Cancellation REG. PAGE NO.
On 1st April, 2020, in MK Ltd.’s (unlisted company other than AIFI, Banking company, NBFC and
HFC) ledger 9% debentures appeared with a opening balance of Rs. 50,00,000 divided into 50,000
fully paid debentures of Rs. 100 each issued at par. Interest on debentures was paid half-yearly on
30th September and 31st March every year. On 31.5.2020, the company purchased 8,000 debentures of
its own @ Rs. 98 (ex-interest) per debenture. On same day it cancelled the debentures acquired. You
are required to prepare necessary ledger accounts (excluding bank A/c).

Q7. Purchase of Own Deb. From Open Market for cancellation REG. PAGE NO.
The following balances appeared in the books of a company unlisted company other than AIFI, Banking
company, NBFC and HFC) as on December 31,2001:
6% Mortgage 10,000 debentures of Rs. 100 each; Debenture Redemption Reserve (for redemption of
debentures) Rs. 50,000; Investment in Deposits with a scheduled bank, free from any charge or lein Rs.
1,50,000 at interest 4% receivable on 31st December every year. Bank balance with the company is Rs.
9,00,000.
The Interest on debentures had been paid up to December 31st,2001. On February 28, 2002, the
investments were released at par and the debentures were paid off at Rs. 101, together with accrued
interest. Write up the concerned ledger accounts (excluding bank transactions). Ignore Taxation.

Q8. Own Debentures - Cancellation REG. PAGE NO.

Sencom Limited (listed company) issued Rs. 1,50,000 5% Debentures on 30th September 2000
on which interest is payable half yearly on 31st March and 30th September. The company has power
to purchase debentures in the open market for cancellation thereof. The following purchases were made
during the year ended 31st December, 2002 and the cancellation were made on the same date.
On 31 December 2000, investments made for the purpose of redemption were Rs. 22,500.
1st March 2002 - Rs. 25,000 nominal purchased for Rs. 24,725 ex-interest
1st September 2002 - Rs. 20,000 nominal purchased for Rs. 20,125 cum-interest
You are required to pass Journal Entries and also draw up the following accounts upto the date of
cancellation:
1. Debentures Account
2. Own Debentures Investment Account
Ignore taxation and make calculations to the nearest rupee.

Q9. Own Debentures - Cancellation REG. PAGE NO.

The following balances appeared in the books of Paradise Ltd. (unlisted company other than AIFI, Banking
company, NBFC and HFC) as on 1-4-2001:
(i) 12 % Debentures Rs. 7,50,000
(ii) Balance of DRR Rs. 25,000
(iii) DRR Investment 1,12,500 represented by 10% Rs. 1,125 Secured Bonds of the Government
of India of Rs. 100 each.
Annual contribution to the DRR was made on 31st March every year. On 31-3-2002, balance at bank
was Rs. 7,50,000 before receipt of interest. The investment were realised at par for redemption of
debentures at a premium of 10% on the above date. You are required to prepare the following accounts
for the year ended 31st March 2002:
4.11

Debentures A/c, DRR A/c, DRR Investment A/c, Bank A/c, Debentureholder A/c.

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Q10. Own Debentures - Cancellation REG. PAGE NO.
YZ Ltd. (an unlisted company other than AIFI, Banking company, NBFC and HFC) had 16,000, 12%
debentures of Rs. 100 each outstanding as on 1st April, 2001, redeemable on 31st March, 2002. On 1 April
2001, the following balances appeared in the books of accounts- Investment in 2,000 9% secured
Govt. bonds of Rs. 100 each. DRR is Rs. 1,00,000. Interest on investments is received yearly at the end
of financial year. 2,000 own debentures were purchased on 31st March 2002 at the average price of Rs.
99 and cancelled on the same date. On 31st March, 2002, the investments were realised at par and
the debentures were redeemed. You are required to write up the following accounts for the year ended
31st March 2002. Prepare 12% Debentures A/c, DRR A/c, Debenture Redemption Investment A/c.

Q11. Own Debentures – Cancellation Basic Question REG. PAGE NO.

On 1st January, 2006 Raman Ltd. allotted 20,000 9% Debentures of Rs. 100 each at par, the total amount
having been received along with applications.
(i)On 1st January, 2008 the Company purchased in the open market 2,000 of its own debentures @ Rs. 101
each and cancelled them immediately.
(ii) On 1st January, 2011 the company redeemed at par debentures for Rs. 6,00,000 by draw of a lot.
(iii) On 1st January, 2012 the company purchased debentures of the face value of Rs. 4,00,000 for 3,95,600
in the open market, held them as investments for one year and then cancelled them.
(iv)Finally, as per resolution of the board of directors, the remaining debentures were redeemed at
a premium of 2% on 1st January, 2016.
You are required to prepare required journal entries for the above-mentioned transactions ignoring
debenture redemption reserve, debenture interest and interest on own debentures.

Q12. Own Debentures – Cancellation Basic Question REG. PAGE NO.

Gurudev Limited purchases for immediate cancellation 6,000 of its own 12%debentures of Rs. 100
each on 1stNovember, 2017. The dates of interest being 31st March and 30th September. Pass necessary
journal entries relating to the cancellation if:
(i) Debentures are purchased at Rs. 98 ex-interest.
(ii) Debentures are purchased at Rs. 98 cum-interest.

Q13. Open Market Purchase – Cancellation REG. PAGE NO.

A Company had issued 1,000 12% debentures of Rs. 100 each redeemable at the company's option
at the end of 10 years at par or prior to that by purchase in open market or at Rs. 102 after giving
6 months notice. On 31st December, 2016, the accounts of the company showed the following balances:
Debenture redemption fund Rs. 53,500 represented by 10% Govt. Loan of a nominal value of Rs. 42,800
purchased at an average price of Rs. 101 and Rs. 10,272 uninvested cash in hand. On 1st January 2017,
the company purchased Rs. 11,000 of its own debentures at a cost of Rs. 10,272. On 30th June, 2017,
the company gave a six months notice to the holders of Rs. 40,000 debentures and on 31st December,
2017 carried out the redemption by sale of Rs. 40,800 worth of Govt. Loan at par and also cancelled
the own debentures held by it.
Prepare ledger account of Debenture Redemption Fund Account and Debenture Redemption
Fund Investment Account for the year ended 31.12.2017, assuming that, interest on company
debentures & Govt. loan was payable on 31st December every year.
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Rs.TO GET 10% OFF ON UNACADEMY SUBSCRIPTIONS
4

IN-CLASSROOM PROBLEMS PRACTISE PROBLEMS SELF-ASSESSMENT PROBLEMS

Essentials Growth Maturity
Q1. Partly Convertible Debentures (RTP N19) REG. PAGE NO.
Omega Limited (a manufacturing company) recently made a public issue in respect of which the following
information is available:
(a) No. of partly convertible debentures issued - 2,00,000; face value and issue price Rs. 100 per
debenture.
(b) Convertible portion per debenture- 60%, date of conversion- on expiry of 6 months from the date of
closing of issue i.e. 31st October 2019.
(c) Date of closure of subscription lists - 1.5.2019, date of allotment - 1.6.2019, rate of interest on
debenture - 15% payable from the date of allotment, value of equity share for the purpose of
conversion - Rs. 60 (Face Value Rs. 10).
(d) Underwriting Commission - 2%.
(e) No. of debentures applied for - 1,50,000.
(f) Interest payable on debentures half-yearly on 30th September and 31st March.
Write relevant journal entries for all transactions arising out of the above during the year ended 31 st
March, 2020 (including cash and bank entries).

HINT: Refer similar Q3 in Essentials.

Q2. Basic Question (CA-Inter New N19) REG. PAGE NO.

A Company had issued 40,000, 12% Convertible debentures of Rs. 100 each on 1st April, 2015. The
debentures are due for redemption on 1st March, 2019. The terms of issue of debentures provided that they
were redeemable at a premium of 5% and also conferred option to the debentureholders to convert 20%
of their holding into equity shares (Nominal value Rs.10) at a price of Rs.15 per share and the payment in
cash. Debentureholders holding 5,000 debentures did not exercise the option. Calculate the number of
equity shares to be allotted to the Debentureholders and the amount to be paid in cash on redemption.
HINT: Refer similar Q2 in Essentials.

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4.13

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Connect CA. Anshul on CA – INTERMEDIATE: ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL

 CH.
USE CODE ‘ANSHUL’ TO GET 10% OFF ON UNACADEMY SUBSCRIPTIONS
4

IN-CLASSROOM PROBLEMS PRACTISE PROBLEMS SELF-ASSESSMENT PROBLEMS

Essentials Growth Maturity
4. 14

CA – INTERMEDIATE: ACCOUNTING BY CA. CS. ANSHUL A. AGRAWAL Connect CA. Anshul on