Question:
VX Ltd. issued 30,000, 8% debentures of ₹ 100 each at a discount of 10% redeemable at a certain rate of premium. On issue of these debentures, ‘Loss on issue of debentures account’ was debited with ₹ 4,50,000. The amount of premium on redemption of debentures was___.
VX Ltd. issued 30,000, 8% debentures of ₹ 100 each at a discount of 10% redeemable at a certain rate of premium. On issue of these debentures, ‘Loss on issue of debentures account’ was debited with ₹ 4,50,000. The amount of premium on redemption of debentures was___.
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‘Loss on issue of debentures’ includes both discount on issue and premium on redemption. Subtract the discount from total loss to find the premium.
Updated On: Jul 4, 2025
- ₹ 3,00,000
- ₹ 1,50,000
- ₹ 30,000
- ₹ 4,50,000
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The Correct Option is A
Solution and Explanation
Step 1: Calculate total face value of debentures issued:
\[ 30,000 \times ₹ 100 = ₹ 30,00,000 \] Step 2: Discount on issue = 10% of face value
\[ 10% \times 30,00,000 = ₹ 3,00,000 \] Step 3: Total loss on issue of debentures = ₹ 4,50,000
This includes discount on issue + premium on redemption. Step 4: Calculate premium on redemption:
\[ \text{Premium} = \text{Loss on issue} - \text{Discount on issue} = ₹ 4,50,000 - ₹ 3,00,000 = ₹ 1,50,000 \]
\[ 30,000 \times ₹ 100 = ₹ 30,00,000 \] Step 2: Discount on issue = 10% of face value
\[ 10% \times 30,00,000 = ₹ 3,00,000 \] Step 3: Total loss on issue of debentures = ₹ 4,50,000
This includes discount on issue + premium on redemption. Step 4: Calculate premium on redemption:
\[ \text{Premium} = \text{Loss on issue} - \text{Discount on issue} = ₹ 4,50,000 - ₹ 3,00,000 = ₹ 1,50,000 \]
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