Question

What is meant by issue of debentures for consideration other than cash?

Hint:

Issuing debentures for consideration other than cash is a strategic way to acquire assets or settle liabilities while preserving liquidity.

Answer 1

When a company issues debentures for consideration other than cash, it means the debentures are issued in exchange for acquiring assets or settling liabilities instead of receiving cash payment. For instance, a company may issue debentures to purchase machinery, land, or to settle creditors. This method allows the company to procure resources or settle obligations without impacting its cash flow.