When debentures are issued with some assets of the company as security against non payment of principal debt and or interest they have secured debentures otherwise it is. There are certain restrictions placed by the government. Like it can issue convertible redeemable debentures.
A company can issue debentures with multiple classifications. In this case the long term borrowings in the liabilities section equals the cash in the balance sheet s assets side. When the issue price and face value of a debenture are equal it is known as the issue of debenture at par.
Issue of debentures at par. This account shall be depicted on the liabilities side of the balance sheet below the heading reserves and surplus. The premium amount charged to a special a c is known as securities premium reserve a c.
The issue of debentures at a premium is when the money is charged more than the nominal value. The issue of debentures at premium. Key takeaways a debenture is a type of debt instrument that is not backed by any collateral and usually has.
Both corporations and governments frequently issue debentures to raise capital or funds. This issue of debentures that happens can be of three kinds just like an issue of shares at par at a discount and at a premium so let us take a look at all three and their respective accounting entries as well. Debentures in the general course of business are issued for cash.
Issue of debentures for cash. Issue of debenture at par. Once the company invites the applications and the investors apply for the debentures the company can issue debentures in one of the following ways.
Different ways for issuing of debenture.
Issue of debentures. When debentures are to be redeemed after a fixed period say 5 years then the amount of discount on issue of debentures can be transferred to profit and loss account by equal instalments. For example a company issued 1 000 debentures of rs 100 each at a discount of rs 2 000. The company can issue debentures at a par at a premium or at a discount as explained below.
The company can issue debentures at a par at a premium or at a discount as explained below. For example a company issued 1 000 debentures of rs 100 each at a discount of rs 2 000. When debentures are to be redeemed after a fixed period say 5 years then the amount of discount on issue of debentures can be transferred to profit and loss account by equal instalments.
