Doubts

SOLUTION Interest on debentures is a charge against the profit which means interest on debentures shall always be paid whether profits are sufficient or not.

SOLUTION It is a loan on which interest is paid at a specified rate.

SOLUTION Irredeemable debentures are called perpetual debentures because these are not repayable during the life span of the company.

SOLUTION Debenture Suspense A/c          Dr. To Debentures A/c

SOLUTION Sometimes, when a Company takes a loan, the Company may have to issue debentures as a subsidiary or secondary security in addition to the principal security. If a default…

SOLUTION Sometimes a Company purchases some assets from the vendor and instead of paying the vendor in cash, the Company may decide to issue debentures to the vendor in payment…

SOLUTION Coupon rate is the rate of interest at which interest is paid by the Company on its debentures.

SOLUTION A Zero-Coupon Bond is one which does not carry any specific rate of interest. In order to compensate the investors, such bonds are issued at a substantial discount. The…

SOLUTION When only a part of the amount of debenture is convertible into shares or other securities, such debentures are called ‘Partly Convertible Debentures’. When the full amount of debenture…