Question

X Ltd. took a loan of  ₹ 3,00,000 from IDBI Bank . The company issued 4,000; 9% Debentures of  ₹ 100 each as a collateral security for the same . Show how these items will be presented in the Balance Sheet of the company. 

Answer 1

When Debentures Issued as Collateral Security is shown separately 

X Ltd.
Balance Sheet

Particulars	Note No.	Amount  (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
2. Non-Current Liabilities
a. Long-Term Borrowings	1	3,00,000
3. Current Liabilities
Total		3,00,000
II. Assets
1.Non-Current Assets
2.Current Assets
a. Cash and Cash Equivalents	2	3,00,000
Total		3,00,000

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
1	Long-Term Borrowings
	Secured:
	Loan  From IDBI(Secured by issue of  Debentures of Rs 4,00,000)		3,00,000
	9 % Debentures (Issued as Collateral Security against loan)	4,00,000	-
	Less: Debenture Suspense Account	4,00,000
			3,00,000
2	Cash and Cash Equivalents
	Cash at Bank		3,00,000

Alternative Method: When Debentures Issued as Collateral Security are not shown separately

X Ltd
Balance Sheet

Particulars	Note No.	Amount  (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
2. Non-Current Liabilities
a. Long-Term Borrowings	1	3,00,000
3.Current Liabilities
Total		3,00,000
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	2	3,00,000
Total		3,00,000

NOTES TO ACCOUNTS

Note No.	Particulars	Amount (Rs)
1	Long-Term Borrowings
	Secured:
	Loan From IDBI (Secured by issue of  9% Debentures of Rs 4,00,000 as Collateral Security)	3,00,000
2	Cash and Cash Equivalents
	Cash at Bank	3,00,000