In this article we will discuss about the accounting entries for issue of debentures. (A) Issue of Debenture for Cash: The issue procedure with regard to debentures is the same as that of shares. The amount due on debentures may be paid in installments, such as, Application, Allotment and Calls. When debentures are issued at premium, the amount of premium [...]
Here is a compilation of top six accounting problems on debentures with its relevant solutions. Illustration 1: AB Ltd. purchased assets worth Rs. 6, 80,000 and took over liabilities of Rs. 80,000. It was agreed to pay the purchase price of Rs. 6,40,000 by issuing debentures valued Rs. 4,40,000 of Rs. 100 each at a premium of 10% and balance [...]
The purchase of own debentures in the market may be for different reasons: 1. Where Debentures are Purchased for Cancellation 2. When Debentures are Purchased for Investment. 1. Where Debentures are Purchased for Cancellation: When Company's own debentures are purchased by the Company, "Own Debenture Account" (or Investment in Own Debenture Account) will be debited as against cash paid for [...]