Question

Profit on cancellation of own debentures is transferred to ______.

पर्याय

• Profit and loss appropriation a/c

• Debenture redemption reserve

• Capital reserve

• None of the above

Answer 1

Profit on cancellation of own debentures is transferred to Capital reserve.

Explanation:

Because the profit on debenture redemption is a capital profit, it should be transferred to the capital reserve account; if no sinking fund exists, an amount equivalent to the nominal value of debentures cancelled should be transferred to the general reserve from profits.