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Question
Give the meaning of ‘Issue of Debentures as a collateral security.
Solution
Issue of Debentures as a collateral security refers to the debentures which are issued without any consideration to lender or financial institution as security in addition to the primary security.
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RELATED QUESTIONS
Give the meaning of 'Debentures issued as Collateral Security'.
Short Answer Question
Can the company purchase its own debentures?
Best Barcode Ltd. took a loan of ₹ 5,00,000 from a bank giving ₹ 6,00,000; 9% Debentures as collateral security. Pass journal entries regarding issue of debentures , if any, and show this loan in the Balance Sheet of the company.
A company took a loan of ₹ 4,00,000 from Bandhan Bank Ltd. and issued 8% Debentures of ₹ 4,00,000 as a collateral security.
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.
S. Singh Limited obtained a loan of ₹ 5,00,000 from State Bank of India @ 10% p.a. interest. The company issued ₹ 7,50,000, 10% Debentures of ₹ 100 each in favour of State Bank of India as Collateral Security. Pass necessary Journal entries for the above transactions:
(i) When company decided not to record the issue of 10% Debentures as Collateral Security.
(ii) When company decided to record the issue of 10% Debentures as Collateral Security.
