Question:
Shyamla Ltd. purchased machinery of ₹9,50,000 from Rohini Ltd. The payment was made by issue of 9% debentures of ₹100 each at a discount of 5% redeemable at a premium of 10% after four years. The number of debentures issued in favour of Rohini Ltd. will be:
Shyamla Ltd. purchased machinery of ₹9,50,000 from Rohini Ltd. The payment was made by issue of 9% debentures of ₹100 each at a discount of 5% redeemable at a premium of 10% after four years. The number of debentures issued in favour of Rohini Ltd. will be:
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When debentures are issued at discount and redeemable at premium, use the redemption value to calculate liability.
Updated On: Jul 19, 2025
- 10,000
- 9,500
- 9,050
- 8,636
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The Correct Option is D
Solution and Explanation
Face value of each debenture = ₹100
Issued at a discount of 5% $\Rightarrow$ Issue price = ₹95
Redeemable at a premium of 10% $\Rightarrow$ Redemption value = ₹110
Effective liability per debenture = ₹110
But Rohini Ltd. will receive only ₹95 per debenture now
Company is buying machinery worth ₹9,50,000
Number of debentures = ₹9,50,000 $÷$ ₹110 = 8,636.36 ≈ 8,636
Issued at a discount of 5% $\Rightarrow$ Issue price = ₹95
Redeemable at a premium of 10% $\Rightarrow$ Redemption value = ₹110
Effective liability per debenture = ₹110
But Rohini Ltd. will receive only ₹95 per debenture now
Company is buying machinery worth ₹9,50,000
Number of debentures = ₹9,50,000 $÷$ ₹110 = 8,636.36 ≈ 8,636
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