Advertisements
Advertisements
प्रश्न
Long Answer Question
Describe the steps for creating Sinking Fund for redemption of debentures.
उत्तर
The various steps involved in the creation of Sinking Fund for redemption of debentures can be better understood by the help of the example explained below.
A Company issued 10% Debentures of Rs 5,00,000 for 3 years. The investment is expected to earn 6% p.a. The Sinking Fund table shows that 0.31411 invested annually at 6% amount to Rs 1 in 3 years.
Step 1: Calculate the amount of instalment to be required every year for investment with the help of the Sinking Fund table. Like in the example Rs 1,57,055 (i.e. 0.31411 × 5,00,000) is required every year.
Step 2: The amount of instalment calculated in the above step is transferred to the Debenture Redemption Fund (Sinking Fund) by debiting from Profit and Loss Appropriation Account.
Step 3: In the first year, the above instalment is invested to yield amount required for redemption of debenture by debiting Debenture Redemption Fund Investment Account.
Step 4: The interest on investment is received on half yearly or annual basis. In the example, the interest of Rs 9,423 is received on annual basis.
`(1,57,055 xx 6/100 = 9,423)`
Step 5: The total amount of investment, i.e. interest plus instalment is invested in the subsequent year. In the example, Rs 1,66,478 (i.e. Rs 1,57,055 + Rs 9,423) is invested in the next year.
Step 6: Repeat the Step 2, 3, 4 for each subsequent years up to the end of the life of the debenture. In the year of redemption, the instalment (i.e. the last instalment) will be debited to the Profit and Loss Appropriation Account but will not be invested.
Step 7: In the year of redemption, the investment is sold off.
Step 8: The profit (loss) on the sale of the investment is transferred by debiting (crediting) Debenture Redemption Fund Investment Account to the Debenture Redemption Fund Account.
Step 9: The payment to the debenture holder is made.
Step 10: The balance of Debenture Redemption Fund Account if any, is transferred to the General Reserve.
APPEARS IN
संबंधित प्रश्न
Long Answer Question
Differentiate between redemption of debentures out of capital and out of profits.
Long Answer Question
Explain the guidelines of SEBI for creating Debenture Redemption Reserve.
Long Answer Question
Can a company purchase its own debentures in the open market? Explain
Long Answer Question
What is meant by conversion of debentures? Describe the method of such a conversion.
A company issued debentures of the face value of Rs 5,00,000 at a discount of 6% on April 01, 2012. These debentures are redeemable by annual drawings of Rs,1,00,000 made on March 31 each year. The directors decided to write off discount based on the debentures outstanding each year.
Calculate the amount of discount to be written-off each year. Give journal entries also.
What journal entries will be made in the following cases when company redeems debentures at the expiry of period by serving the notice: (a) when debentures were issued at par with a condition to redeem them at premium; (b) when debentures were issued at premium with a condition to redeem that at par; and (c) when debentures were issued at discount with a condition to redeem them at premium?
Krishna Ltd. had outstanding 20,000, 9% debentures of ₹ 100 each on 1st April 2014. These debentures were redeemable at a premium of 10% in two equal installments starting from 31st March 2018. The company had a balance of ₹ 4,00,000 in Debenture Redemption Reserve on 31st March 2017. Pass necessary journal entries for the redemption of debentures in the books of Krishna Ltd. for the year ended 31st March 2018.
Convertible debentures cannot be issued at a discount if ______.
Consider the following statements.
Statement 1 - "No DRR is required for debentures issued by All India Financial Institutions, regulated by RBI and Banking Companies for both public as well as privately placed debentures".
Statement 2 - DRR is required for debentures issued by All India Financial Institutions, regulated by RBI and Banking Companies for both public as well as privately placed debentures"
Give the necessary journal entries at time of redemption of debentures
"X Ltd. issued 500, 9% debentures of Rs.100 each at par and redeemable at par at the end of 5 years out of capital."
Shashi Ltd. decided to redeem its 8,000, 11% Debentures of ₹ 100 each at a premium of 10%. The minimum amount transferred to Debenture Redemption Reserve will be: (assume that the company is not listed)
According to SEBI guidelines, what percentage of the amount of debentures must be transferred to Debenture Redemption Reserve, before the commencement of redemption of debentures, in the case of convertible debentures?
Premium on Redemption of Debentures Account is a ______ Account.
Premium on Redemption of Debentures Account is a ______.
Premium on redemption of debentures is generally provided at the time of ______.
Sources of finance for the redemption of debentures are ______.
