Question

Assertion (A): Irredeemable debentures are also known as perpetual debentures. Reason (R): The company does not give any undertaking for the repayment of money borrowed by issuing such debentures. They are repayable on the winding up of the company or on the expiry of a long period. Choose the correct option from the following:

• A. Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).
• B. Both Assertion (A) and Reason (R) are correct, but Reason (R) is {not} the correct explanation of Assertion (A).
• C. Assertion (A) is incorrect, but Reason (R) is correct.
• D. Assertion (A) is correct, but Reason (R) is incorrect.

Hint:

Irredeemable debentures are considered perpetual liabilities and are typically used for long-term funding.

Answer 1

The Correct Option is A

Irredeemable debentures do not have a specific repayment date; they are typically perpetual in nature. These debentures are repayable either on winding up or on expiration of a long-term agreement. The reason provided explains why these debentures are classified as irredeemable or perpetual.