Question : Choose which of the following statements is true?
Option 1: Surplus, i.e., Balance in Statement of Profit and Loss cannot be transferred to Debentures Redemption Reserve.
Option 2: At least 10% of the redeemable value of debentures should be set aside to Debentures Redemption Reserve before the redemption of debentures.
Option 3: Debentures can be redeemed out of capital except by Unlisted companies that are not NBFCs or HFCs.
Option 4: Unlisted NBFCs and HFCs cannot redeem debentures out of capital alone because they haveto transfer amount to Debentures Redemption Reserve.
Correct Answer: Debentures can be redeemed out of capital except by Unlisted companies that are not NBFCs or HFCs.
Solution : Answer = Debentures can be redeemed out of capital except by Unlisted companies that are not NBFCs or HFCs.
Surplus, i.e., Balance in the Statement of Profit and Loss, cannot be transferred to Debentures.
Redemption Reserve. At least 10% of the redeemable value of debentures should be set aside for Debentures Redemption Reserve before the redemption of debentures. Debentures can be redeemed out of capital except by Unlisted companies that are not NBFCs or HFCs, and Unlisted NBFCs and HFCs cannot redeem debentures out of capital alone because they have to transfer the amount to Debentures Redemption Reserve. Hence, the correct option is 3.
Question : Choose which of the following statements is true.
Option 1: Debentures Redemption Reserve is set aside by all the companies except All India Financial Institutions regulated by RBI and Banking Companies.
Option 2: Amount is set aside to Debentures Redemption Reserve by Unlisted Companies which are not Non-Banking Finance Companies (NBFCs) or Housing Finance Companies (HFCs).
Option 3: Amount is set aside to Debentures Redemption Reserve by all Unlisted Companies.
Option 4: Debentures Redemption Investment is made by the companies required to set aside amount to Debentures Redemption Reserve.
Question : After redeeming the debentures, in part or total outstanding debentures, amount of DRR relating to debentures redeemed is transferred to-------
Option 1: Capital Reserve
Option 2: General Reserve
Option 3: Capital Redemption Reserve
Option 4: Securities Premium Reserve
Question : Puran Store Ltd., an Unlisted Company, is to redeem 5000,8% Debentures of Rs. 100 each on 30th June 2020. It has a balance of Rs. 10,000 in Debentures Redemption Reserve. It decides to set aside the amount to Debentures Redemption Reserve on 31st March 2020 on which date it has
following Reserves and Surplus: Rs. Securities Premium Reserve 25,000 Capital reserve Rs 20,000 General Reserve 30,000; and Surplus, i.e., Balance in Statement of Profit and Loss 30,000 Balance Rs. 40,000 can be set aside to Debentures Redemption Reserve from:
Option 1: Capital Reserve and General Reserve
Option 2: Capital Reserve and Securities Premium Reserve
Option 3: General Reserve and Surplus, i.e., Balance in Statement of Profit and Loss
Option 4: Securities Premium Reserve and Surplus, i.e., Balance in Statement of Profit and Loss
Question : Choose which of the following statements is not correct.
Option 1: Debentures Redemption Investment is made by all companies redeeming the debentures.
Option 2: All India Financial Institutions (AIFIs), Banking Companies and Other Financial Institutions are not required to set aside amount to Debentures Redemption Reserve.
Option 3: Unlisted NBFCs and HFCs are not required to invest 15% of Outstanding Debentures in Specified Securities.
Option 4: Debentures Redemption Reserve can be used only for redemption of debentures.
Question : When Debentures are redeemed setting aside 10% of nominal (face) value of outstanding debentures to Debentures Redemption Reserve (DRR) known as redemption out of --------
Option 1: Out of capital
Option 2: Out of profit
Option 3: Both 1 and 2
Option 4: None of the above
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