Question

AB and Co, purchased assets worth Rs 28,80,000 from vendor . It issued debentures of Rs 100 each at a discount of 4% in full satisfaction of the purchase consideration. The number of debentures issued to vendor is :

• A. 30,000
• B. 28,800
• C. 32,000
• D. 27,693

Hint:

Always remember to calculate the number of Debentures from the purchase consideration, rather than the face value of the Debentures.

Answer 1

The Correct Option is A

Calculating the Number of Debentures Issued:
This calculation involves determining the effective value of each debenture after accounting for the discount and then finding out how many such debentures are needed to cover the purchase consideration.
Step 1: Calculate Issue Price per Debenture Face Value of Debenture = Rs100
Discount = 4% of Rs100 = Rs4
Issue Price = Face Value - Discount
Issue Price = Rs100 - Rs4 = Rs96

Step 2: Calculate the Number of Debentures Issued Purchase Consideration = Rs28,80,000
Number of Debentures = Purchase Consideration / Issue Price per Debenture
Number of Debentures = Rs28,80,000 / Rs96 = 30,000

Therefore, ABandCo issued 30,000 debentures to the vendor.