ISC Class 12th Accountancy Chapter 3 - Redemption of Debentures Important Questions with Answers

Relay Ltd. (an unlisted Non NBFC) redeems its 8,000, 10% Debentures of ? 100 each in instalments as follows:

On the basis of the above details, what will be the amount of Debenture Redemption Reserve which the company will transfer to General Reserve on 31st March, 2021?

Orange Ltd. took over assets of ? 7,00,000 and liabilities of ? 60,000 of Purple Ltd. for a purchase consideration of ? 6,30,000 payable by the issue of 10% Debentures of ? 100 each at a premium of 10% and, if need be, a part of the purchase consideration in cash. How will the company meet the purchase consideration?

What is the maximum amount of debentures which an unlisted company, other than a NBFC and HFC, can redeem out of its capital?

Sunrise Ltd. a listed NBFC, had outstanding 20,000, 7% Debentures of ? 100 each, due for redemption on 31st March, 2022.

As per the provisions of the Companies Act, 2013, what amount, if any, does the company need to transfer to Debenture Redemption Reserve, before it can redeem the debentures?

On 1^st April, 2022, Lighthouse Ltd. purchased land from Bricks Ltd. The payment was made on the same day by:

1. Issuing a bank draft for ? 2,00,000.
2. Drawing a Promissory Note in favour of Bricks Ltd. for ? 10,00,000.
3. Issuing 8,000, 10% Debentures of ? 100 each at par, redeemable at a premium of 10% after three years.

You are required to pass necessary journal entries in the books of Lighthouse Ltd. on the date of purchase of land.

Jerome Ltd., an unlisted manufacturing company, had 20,000, 6% Debentures of ?100 each due for redemption at par on 31st March, 2022. On this date the company had the required amount of ? 2,00,000 in its Debenture Redemption Reserve.

The Debenture Redemption Investment which was purchased on 30th April, 2021, was realised at 98% on the date of redemption and the debentures were redeemed on the due date.

You are required to pass journal entries in the books of the company for the year 2021-22. (Ignore interest on debentures).

On 1^st April, 2017, Gabriel Ltd., a listed company, issued 3,000, 8% Debentures of ? 100 each. One-third of the Debentures were redeemed at par on 31^st March, 2021 and the remaining two-third on 31^st March, 2022. The company paid interest on debentures annually on 31^st March.

After meeting the requirements of the Companies Act, 2013, regarding Debenture Redemption Investment, the company redeemed the debentures.

You are required to record necessary journal entries in the books of the company only on 31st March, 2022; including entries for interest on debentures.

Credit Access Grameen Ltd., a listed NBFC - MFI (Micro Finance Institution), is all set to enter the bond market next week to raise up to ? 1,000 crore in non-convertible debentures, as it looks to diversify its liability profile. 
According to the provisions of the Companies Act, 2013, what is the maximum amount of these non-convertible debentures which Credit Access Grameen Ltd. will redeem out of its capital?

On 1st April, 2022, the following balances appeared in the books of Alpha Pvt. Ltd.

The Debenture Redemption Investment, which was purchased by the company on 1st April, 2022, was realised at 101% on the date of redemption and the debentures were redeemed on the due date. 

You are required to prepare the following accounts for the year 2022-23 in the books of Alpha Pvt. Ltd.

1. Debenture holders’ Account.
2. Debenture Redemption Investment Account.

On 1st April, 2022, Resorts Ltd. (a listed construction company) had 60,000, 5% Debentures of ?100 each due for redemption at par on 31st March, 2023.
As per the law, investment was made in a fixed deposit of a bank on 30th April, 2022, earning interest @5% per annum.
Tax @10% was deducted by the bank on the interest.

You are required to pass necessary journal entries in the year of redemption of debentures, including entries for interest on Debenture Redemption Investment. (Ignore the interest on Debentures)