Question

On 1\textsuperscript{st May, 2023, Amrit Ltd. issued 10,000, 10\% debentures of \rupee100 each at a premium of 10\%, redeemable at a premium of 10\%. Loss on issue of debentures will be:}

• A. \rupee2,00,000
• B. \rupee1,30,000
• C. \rupee1,00,000
• D. \rupee80,000

Hint:

For debenture-related calculations, focus on the difference between issue premium and redemption premium to determine the loss or gain.

Answer 1

The Correct Option is C

The issue price of a single debenture is: \[ \text{Issue price} = \rupee100 + \rupee10 (\text{premium}) = \rupee110. \] The redemption price of a single debenture is: \[ \text{Redemption price} = \rupee100 + \rupee10 (\text{premium}) = \rupee110. \] The loss on issue of debentures is calculated as: \[ \text{Loss} = \text{Redemption premium} - \text{Issue premium}. \] For 10,000 debentures: \[ \text{Loss} = (\rupee10 \times 10,000) = \rupee1,00,000. \] Thus, the loss on issue of debentures is \rupee1,00,000.