Question

Universal Ltd. took over machinery of ₹ 3,30,000, furniture of ₹ 1,60,000 and liabilities of ₹ 80,000 from Amol Ltd. for a purchase consideration of ₹ 4,50,000. The payment to Amol Ltd. was made by issue of 10% Debentures of ₹ 50 each at a discount of 10%. The number of debentures issued to Amol Ltd. was:

• A. 1,000
• B. 4,500
• C. 45,000
• D. 10,000

Hint:

When debentures are issued at discount:

• Issue Price = Face Value - Discount
• Number of Debentures = Purchase Consideration ÷ Issue Price

Always use the issue price (not face value) to calculate the number of debentures when issued at discount or premium.

Answer 1

The Correct Option is D

We need to find the number of debentures issued by Universal Ltd. to Amol Ltd. as payment for the purchase consideration.
Step 1: Identify the purchase consideration.
Purchase consideration = ₹ 4,50,000
(This is the amount to be paid to Amol Ltd.) Step 2: Understand the terms of debenture issue.
Debentures are of:

• Face value = ₹ 50 each
• Issued at a discount of 10%

Discount = 10% of face value = 10% of ₹ 50 = ₹ 5 per debenture Step 3: Calculate the issue price per debenture.
Issue price = Face value - Discount
Issue price = ₹ 50 - ₹ 5 = ₹ 45 per debenture Step 4: Calculate the number of debentures to be issued.
Number of debentures = \(\frac{\text{Purchase Consideration}}{\text{Issue Price per Debenture}}\) \[ \text{Number of debentures} = \frac{4,50,000}{45} = 10,000 \] Step 5: Verify.
10,000 debentures × ₹ 45 = ₹ 4,50,000 ✓ Final Answer: (D) 10,000