Question : Choose which of the following statements is true?
Option 1: If a company sets aside profit to Debentures Redemption Reserve, it means redemption is not out of capital alone.
Option 2: If a company sets aside profit equivalent to nominal (face) value of outstanding debentures to Debentures Redemption Reserve, it means redemption is out of profits.
Option 3: Both 1 and 2
Option 4: None of the above
Correct Answer: Both 1 and 2
Solution : Answer = Both 1 and 2
Setting aside the profit for Debentures Redemption Reserve indicates a provision for future debenture redemption. If it's equivalent to the nominal value of outstanding debentures, it implies redemption from profits. If not, it suggests redemption from a combination of profits and other sources, like capital. Hence, the correct option is 3.
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
Question : On 1st Nov. 2018, VIVO lLtd. issued 40,000, 10% Debentures of Rs.100 each at a discount of 5%, redeemable at par after four years. The debentures were fully subscribed. It has a balance of Rs.80,000 in Capital Reserve and Rs.1,50,000 in Securities Premium Reserve which the
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile