Debentures are “Creditorship Securities” issued by a company, usually for a fixed period, at a specified rate of interest payable periodically.
Here I have presented slides relating to "Issue of Debentures"
This document discusses various accounting entries related to corporate accounting, share capital, debentures, and the purchase of own debentures by a company. It provides journal entries for issuing share capital for cash, issuing debentures at par, premium and discount, and redeeming debentures. It also discusses entries for purchasing a company's own debentures and subsequently selling or cancelling them.
the ppt is about the Journal entries made to record issue of debenture under companies act 1956. It covers issue of debenture as per different situations. Hope you people find it helpful. you are welcome for any query.
1) A debenture is a document issued by a company acknowledging a debt owed to the holder of the debenture. Debentures contain a promise to repay the principal amount on a specified date and pay interest at a fixed rate periodically.
2) Debentures can be issued by companies in exchange for cash, as collateral security for loans, or as consideration for purchases. Accounting entries are made to record the issue of debentures and receipt of any premium or discount.
3) Interest payment on debentures is recorded through debiting an Interest on Debentures account and crediting amounts to Debenture Holders and tax authorities. Accrued interest is tracked separately
1) Debentures are debt instruments issued by a company to investors that pay a fixed rate of interest but do not give the holder ownership in the company.
2) Debentures can be secured (with a charge on company assets) or unsecured, convertible or non-convertible, redeemable or irredeemable.
3) Companies issue debentures through private placement or public issue to raise long-term funds. Accounting entries are passed depending on whether debentures are issued at par, premium or discount and redeemable at par or premium.
The document discusses accounting treatments for various aspects of issuing and accounting for debentures by a company. It defines debentures and outlines their key features. It also describes different types of debentures based on security, redemption, records, convertibility, priority, and coupon rate. The document then explains accounting entries for issuing debentures for cash at par, premium, and discount. It also covers entries for interest on debentures, writing off discounts, and accrued interest.
Issue of debentures by N. Bala Murali Krishnabala13128
The document discusses debentures, which are instruments issued by a company to raise funds through loans. It defines debentures and explains why companies issue them instead of shares. It then describes the different types of debentures based on security, redemption, negotiability, convertibility, priority, and coupon/interest rate. The document also covers the accounting treatment for issuing debentures for cash, premium, discount, as collateral, or for consideration other than cash. It discusses oversubscription of debentures and conditions for redemption. Finally, it provides journal entries for recording interest payment on debentures.
This document discusses various accounting entries related to corporate accounting, share capital, debentures, and the purchase of own debentures by a company. It provides journal entries for issuing share capital for cash, issuing debentures at par, premium and discount, and redeeming debentures. It also discusses entries for purchasing a company's own debentures and subsequently selling or cancelling them.
the ppt is about the Journal entries made to record issue of debenture under companies act 1956. It covers issue of debenture as per different situations. Hope you people find it helpful. you are welcome for any query.
1) A debenture is a document issued by a company acknowledging a debt owed to the holder of the debenture. Debentures contain a promise to repay the principal amount on a specified date and pay interest at a fixed rate periodically.
2) Debentures can be issued by companies in exchange for cash, as collateral security for loans, or as consideration for purchases. Accounting entries are made to record the issue of debentures and receipt of any premium or discount.
3) Interest payment on debentures is recorded through debiting an Interest on Debentures account and crediting amounts to Debenture Holders and tax authorities. Accrued interest is tracked separately
1) Debentures are debt instruments issued by a company to investors that pay a fixed rate of interest but do not give the holder ownership in the company.
2) Debentures can be secured (with a charge on company assets) or unsecured, convertible or non-convertible, redeemable or irredeemable.
3) Companies issue debentures through private placement or public issue to raise long-term funds. Accounting entries are passed depending on whether debentures are issued at par, premium or discount and redeemable at par or premium.
The document discusses accounting treatments for various aspects of issuing and accounting for debentures by a company. It defines debentures and outlines their key features. It also describes different types of debentures based on security, redemption, records, convertibility, priority, and coupon rate. The document then explains accounting entries for issuing debentures for cash at par, premium, and discount. It also covers entries for interest on debentures, writing off discounts, and accrued interest.
Issue of debentures by N. Bala Murali Krishnabala13128
The document discusses debentures, which are instruments issued by a company to raise funds through loans. It defines debentures and explains why companies issue them instead of shares. It then describes the different types of debentures based on security, redemption, negotiability, convertibility, priority, and coupon/interest rate. The document also covers the accounting treatment for issuing debentures for cash, premium, discount, as collateral, or for consideration other than cash. It discusses oversubscription of debentures and conditions for redemption. Finally, it provides journal entries for recording interest payment on debentures.
This document discusses accounting for debentures. It defines debentures as a written acknowledgment of debt issued by a company under its seal. The document then outlines six journal entries for issuing debentures under different terms, such as being issued at par/premium/discount and redeemed at par/premium. It also provides brief explanations of debentures, reasons for investing in them, how they can be categorized, the nature of premium on redemption accounts, and differences between debentures and shares.
The document discusses various aspects of issuing debentures, including:
1) Debentures can be issued for cash or other consideration, at par value, at a premium, or at a discount. Accounting entries are provided for each scenario.
2) Interest is paid periodically on debentures and is treated as a charge against company profits. Accounting entries track interest becoming due and payments made.
3) Terms of debenture redemption are specified, which can be at par value, premium, or discount. Provisions are made for premium amounts due at redemption from time of issue.
This document discusses accounting entries related to corporate accounting, specifically entries related to share capital, debentures, and own debentures. It provides journal entries for issuing share capital for cash, issuing various types of debentures for cash at par, premium or discount, and redeeming debentures. It also discusses entries for purchasing a company's own debentures and subsequent sale or cancellation.
The document discusses debentures, which are debt instruments issued by companies to borrow money. It defines debentures and describes their key features, such as being a medium- to long-term debt that does not give debenture holders ownership in the company. The document then categorizes debentures based on their convertibility, security, and redemption terms. It provides examples of accounting entries for issuing debentures at par, premium, and discount, as well as for interest payments on debentures.
This document describes a debt restructuring solution that involves debt buyers purchasing delinquent debt from creditors. The debt buyers would pay creditors an immediate lump sum, while allowing consumers to repay the debt buyers over time at a reduced rate. This bridges the gap for consumers who cannot afford to pay creditors directly. The solution uses a software platform to facilitate transactions between creditors, debt buyers, and consumers. The goal is to get debt purchased quickly to provide relief to consumers and guarantee a reduced repayment amount.
This document is a circular from Bangladesh Bank providing guidelines for loan rescheduling by banks in Bangladesh. It outlines conditions under which loans classified as non-performing (substandard, doubtful, bad/loss) may be rescheduled. Banks must have board-approved rescheduling policies and consider borrowers' repayment capabilities. Rescheduling time limits are provided for different loan types. Down payment requirements increase with each rescheduling. Rescheduled loans are classified and provisions made, but borrowers are not considered defaulted until maximum reschedulings are reached. New loans require partial repayment of outstanding balances. Exceptions are provided for export garment and fertilizer importers under certain conditions.
The document provides an overview of education loans, including their purpose, tax benefits, and tips for planning an education loan. It begins by stating that the purpose of education loans is to provide financial assistance to deserving students to pursue higher education. It describes that interest paid on education loans is tax deductible under Section 80E of the Indian Income Tax Act without any limit. Some tips for planning an education loan include assessing one's career interests and skills, researching occupations and educational programs, and planning for education costs. The document aims to help students and parents understand education loans and make informed decisions about financing higher education.
Working capital represents a company's short-term liquidity and is used to finance day-to-day operations. The two main sources of working capital finance are trade credit and bank borrowing. Trade credit involves suppliers extending credit to customers, and is an important source of financing especially for small businesses. Banks provide working capital financing through various facilities like overdrafts, cash credits, bill discounting, and loans. Banks follow guidelines from committees like Tandon and Chore to regulate working capital lending and ensure prudent financing.
This document discusses accounting for debentures. It defines debentures and different types of debentures such as secured vs unsecured, redeemable vs irredeemable, registered vs bearer, convertible vs non-convertible. It also discusses the issuance of debentures for cash, consideration other than cash, and as collateral security. The document covers accounting entries for interest on debentures, redemption of debentures through lump-sum payment, installments, or conversion to shares. It provides an overview of key concepts related to debentures.
This document lists long term funding sources including debentures and term loans. It provides details on 10 individuals who have been provided debentures. It then provides an in depth explanation of debentures including their purpose, features, types, redemption options, advantages and disadvantages. Term loans are also discussed including their key features, specialized institutions that provide them, procedures for application, and advantages and disadvantages.
Commonly overlooked ineligible accounts receivable can significantly affect the amount of collateral available in a borrowing base. This document outlines common types of ineligible A/R, such as accounts over 60 days past due or with aged credits, that are often not properly reported by borrowers. A case example showed over $600,000 in unreported ineligible A/R, demonstrating how thorough reviews are needed. Prevention techniques for lenders include understanding industry practices, reviewing supporting documentation, and performing trend analyses or third party audits.
This document discusses parameters for analyzing loan applications at State Bank of India. It includes an introduction to loans and advances, the bank's profile, procedures for granting loans, required documentation and interest rates. Key financial parameters considered before granting loans are analyzed, including the applicant's character, capacity to repay, and available collateral or security. The document contains statistical techniques, a research methodology, data collection limitations, data analysis, findings, suggestions and bibliography.
This document is a dissertation submitted by Arjun Jaideep to Dr. Rajesh for the degree of MBA at Amity University. The dissertation analyzes non-performing assets (NPAs) of public sector banks, private sector banks, and foreign banks in India. It includes chapters on literature review, research methodology, analysis and interpretations of findings, and conclusions and suggestions. The introduction defines NPAs and discusses asset classification, types of NPAs, reasons for accounts becoming NPAs, the impact of NPAs, and early symptoms of an asset turning non-performing. The dissertation aims to provide an overall view of the existence, treatment, and resolution of the NPA issue in India.
Redemption of debentures by N.Bala Murali Krishnabala13128
1. Redemption of debentures means repaying the amount owed to debenture holders when the debentures mature. There are various conditions that must be met like timing of payment, amount to be paid, mode of payment, and source of funds.
2. Companies must maintain a Debenture Redemption Reserve (DRR) to ensure they have adequate funds for redemption. The DRR is created out of profits and maintained until all debentures are redeemed.
3. Debentures can be redeemed through lump sum payment on maturity, in installments by lottery, or by purchasing debentures on the open market for cancellation. Journal entries are passed
An insurance agent can add value at three stages: 1) Initial stage by correctly assessing needs, providing appropriate solutions, handling paperwork, and working with underwriting; 2) During the policy term by reviewing nominations, providing cash flow updates, reviewing plans, handling retentions and revivals, and making miscellaneous changes; 3) Claims and beyond by assisting with paperwork and forms, appeals, and occasionally ex-gratia claims beyond normal procedures. The agent aims to structure policies that meet needs and guides clients through the lifetime of the policy.
The document discusses the issuance of debentures by companies. It states that companies must receive minimum subscription as stated in the prospectus before allotting debentures. Debentures can be issued for cash, consideration other than cash, or as collateral security. They can be issued at par, at a premium, or at a discount. The document provides journal entries for the issuance of debentures for cash both as a lump sum and in installments, as well as examples of entries for debentures issued at a premium or discount.
Assurance Principal Jennifer Goodman presented "What Was the FASB Thinking?," a discussion and examples of unusual accounting rules, at the 2013 Decosimo Accounting Forum hosted by the University of North Alabama on July 19.
Amalgamation, Absorption, External Reconstruction and Internal Reconstruction...Dr.G. KARTHIKEYAN
This document discusses various forms of business combinations including mergers, acquisitions, and reorganizations. It defines amalgamation as when two or more existing companies combine to form a new company, with all combining companies being liquidated. Absorption is when one existing company takes over the business of one or more others, liquidating the acquired companies. External reconstruction involves liquidating an existing sick company and forming a new company with the same shareholders to take over its business. Internal reconstruction refers to reorganizing a company's capital structure, which may reduce shareholder and creditor claims, and is necessary for companies in poor financial positions. The document provides examples of recent major mergers and acquisitions in India between Tata and Air India
Effects of Entrepreneurship in Economic DevelopmentDr.G. KARTHIKEYAN
The document discusses the effects of entrepreneurship on economic development in India. It notes that entrepreneurship culture has flourished in India since the early 2000s due to economic development that opened new business opportunities. Venture capital, incubators, and a large talent pool have also fueled entrepreneurship growth. The key effects outlined include increasing standards of living, promoting economic independence, benefiting communities through new firms and jobs, encouraging capital formation, eradicating poverty, and raising gross national product and per capita income levels. In conclusion, the document states that entrepreneurs impact economies by creating new jobs, driving innovation, and developing new markets and products.
This document discusses accounting for debentures. It defines debentures as a written acknowledgment of debt issued by a company under its seal. The document then outlines six journal entries for issuing debentures under different terms, such as being issued at par/premium/discount and redeemed at par/premium. It also provides brief explanations of debentures, reasons for investing in them, how they can be categorized, the nature of premium on redemption accounts, and differences between debentures and shares.
The document discusses various aspects of issuing debentures, including:
1) Debentures can be issued for cash or other consideration, at par value, at a premium, or at a discount. Accounting entries are provided for each scenario.
2) Interest is paid periodically on debentures and is treated as a charge against company profits. Accounting entries track interest becoming due and payments made.
3) Terms of debenture redemption are specified, which can be at par value, premium, or discount. Provisions are made for premium amounts due at redemption from time of issue.
This document discusses accounting entries related to corporate accounting, specifically entries related to share capital, debentures, and own debentures. It provides journal entries for issuing share capital for cash, issuing various types of debentures for cash at par, premium or discount, and redeeming debentures. It also discusses entries for purchasing a company's own debentures and subsequent sale or cancellation.
The document discusses debentures, which are debt instruments issued by companies to borrow money. It defines debentures and describes their key features, such as being a medium- to long-term debt that does not give debenture holders ownership in the company. The document then categorizes debentures based on their convertibility, security, and redemption terms. It provides examples of accounting entries for issuing debentures at par, premium, and discount, as well as for interest payments on debentures.
This document describes a debt restructuring solution that involves debt buyers purchasing delinquent debt from creditors. The debt buyers would pay creditors an immediate lump sum, while allowing consumers to repay the debt buyers over time at a reduced rate. This bridges the gap for consumers who cannot afford to pay creditors directly. The solution uses a software platform to facilitate transactions between creditors, debt buyers, and consumers. The goal is to get debt purchased quickly to provide relief to consumers and guarantee a reduced repayment amount.
This document is a circular from Bangladesh Bank providing guidelines for loan rescheduling by banks in Bangladesh. It outlines conditions under which loans classified as non-performing (substandard, doubtful, bad/loss) may be rescheduled. Banks must have board-approved rescheduling policies and consider borrowers' repayment capabilities. Rescheduling time limits are provided for different loan types. Down payment requirements increase with each rescheduling. Rescheduled loans are classified and provisions made, but borrowers are not considered defaulted until maximum reschedulings are reached. New loans require partial repayment of outstanding balances. Exceptions are provided for export garment and fertilizer importers under certain conditions.
The document provides an overview of education loans, including their purpose, tax benefits, and tips for planning an education loan. It begins by stating that the purpose of education loans is to provide financial assistance to deserving students to pursue higher education. It describes that interest paid on education loans is tax deductible under Section 80E of the Indian Income Tax Act without any limit. Some tips for planning an education loan include assessing one's career interests and skills, researching occupations and educational programs, and planning for education costs. The document aims to help students and parents understand education loans and make informed decisions about financing higher education.
Working capital represents a company's short-term liquidity and is used to finance day-to-day operations. The two main sources of working capital finance are trade credit and bank borrowing. Trade credit involves suppliers extending credit to customers, and is an important source of financing especially for small businesses. Banks provide working capital financing through various facilities like overdrafts, cash credits, bill discounting, and loans. Banks follow guidelines from committees like Tandon and Chore to regulate working capital lending and ensure prudent financing.
This document discusses accounting for debentures. It defines debentures and different types of debentures such as secured vs unsecured, redeemable vs irredeemable, registered vs bearer, convertible vs non-convertible. It also discusses the issuance of debentures for cash, consideration other than cash, and as collateral security. The document covers accounting entries for interest on debentures, redemption of debentures through lump-sum payment, installments, or conversion to shares. It provides an overview of key concepts related to debentures.
This document lists long term funding sources including debentures and term loans. It provides details on 10 individuals who have been provided debentures. It then provides an in depth explanation of debentures including their purpose, features, types, redemption options, advantages and disadvantages. Term loans are also discussed including their key features, specialized institutions that provide them, procedures for application, and advantages and disadvantages.
Commonly overlooked ineligible accounts receivable can significantly affect the amount of collateral available in a borrowing base. This document outlines common types of ineligible A/R, such as accounts over 60 days past due or with aged credits, that are often not properly reported by borrowers. A case example showed over $600,000 in unreported ineligible A/R, demonstrating how thorough reviews are needed. Prevention techniques for lenders include understanding industry practices, reviewing supporting documentation, and performing trend analyses or third party audits.
This document discusses parameters for analyzing loan applications at State Bank of India. It includes an introduction to loans and advances, the bank's profile, procedures for granting loans, required documentation and interest rates. Key financial parameters considered before granting loans are analyzed, including the applicant's character, capacity to repay, and available collateral or security. The document contains statistical techniques, a research methodology, data collection limitations, data analysis, findings, suggestions and bibliography.
This document is a dissertation submitted by Arjun Jaideep to Dr. Rajesh for the degree of MBA at Amity University. The dissertation analyzes non-performing assets (NPAs) of public sector banks, private sector banks, and foreign banks in India. It includes chapters on literature review, research methodology, analysis and interpretations of findings, and conclusions and suggestions. The introduction defines NPAs and discusses asset classification, types of NPAs, reasons for accounts becoming NPAs, the impact of NPAs, and early symptoms of an asset turning non-performing. The dissertation aims to provide an overall view of the existence, treatment, and resolution of the NPA issue in India.
Redemption of debentures by N.Bala Murali Krishnabala13128
1. Redemption of debentures means repaying the amount owed to debenture holders when the debentures mature. There are various conditions that must be met like timing of payment, amount to be paid, mode of payment, and source of funds.
2. Companies must maintain a Debenture Redemption Reserve (DRR) to ensure they have adequate funds for redemption. The DRR is created out of profits and maintained until all debentures are redeemed.
3. Debentures can be redeemed through lump sum payment on maturity, in installments by lottery, or by purchasing debentures on the open market for cancellation. Journal entries are passed
An insurance agent can add value at three stages: 1) Initial stage by correctly assessing needs, providing appropriate solutions, handling paperwork, and working with underwriting; 2) During the policy term by reviewing nominations, providing cash flow updates, reviewing plans, handling retentions and revivals, and making miscellaneous changes; 3) Claims and beyond by assisting with paperwork and forms, appeals, and occasionally ex-gratia claims beyond normal procedures. The agent aims to structure policies that meet needs and guides clients through the lifetime of the policy.
The document discusses the issuance of debentures by companies. It states that companies must receive minimum subscription as stated in the prospectus before allotting debentures. Debentures can be issued for cash, consideration other than cash, or as collateral security. They can be issued at par, at a premium, or at a discount. The document provides journal entries for the issuance of debentures for cash both as a lump sum and in installments, as well as examples of entries for debentures issued at a premium or discount.
Assurance Principal Jennifer Goodman presented "What Was the FASB Thinking?," a discussion and examples of unusual accounting rules, at the 2013 Decosimo Accounting Forum hosted by the University of North Alabama on July 19.
Amalgamation, Absorption, External Reconstruction and Internal Reconstruction...Dr.G. KARTHIKEYAN
This document discusses various forms of business combinations including mergers, acquisitions, and reorganizations. It defines amalgamation as when two or more existing companies combine to form a new company, with all combining companies being liquidated. Absorption is when one existing company takes over the business of one or more others, liquidating the acquired companies. External reconstruction involves liquidating an existing sick company and forming a new company with the same shareholders to take over its business. Internal reconstruction refers to reorganizing a company's capital structure, which may reduce shareholder and creditor claims, and is necessary for companies in poor financial positions. The document provides examples of recent major mergers and acquisitions in India between Tata and Air India
Effects of Entrepreneurship in Economic DevelopmentDr.G. KARTHIKEYAN
The document discusses the effects of entrepreneurship on economic development in India. It notes that entrepreneurship culture has flourished in India since the early 2000s due to economic development that opened new business opportunities. Venture capital, incubators, and a large talent pool have also fueled entrepreneurship growth. The key effects outlined include increasing standards of living, promoting economic independence, benefiting communities through new firms and jobs, encouraging capital formation, eradicating poverty, and raising gross national product and per capita income levels. In conclusion, the document states that entrepreneurs impact economies by creating new jobs, driving innovation, and developing new markets and products.
The document presents a case study involving holding company accounts. GK Ltd acquired 75% of shares of GP Ltd on July 31, 2015 for Rs. 280,000. According to the balance sheets on March 31, 2016, GK Ltd had assets of Rs. 5,550,000 and liabilities of Rs. 1,320,000. GP Ltd had assets of Rs. 1,305,000 and liabilities of Rs. 980,000 and earned a profit of Rs. 45,000 for the year. In January 2016, GP Ltd sold goods worth Rs. 15,000 to GK Ltd for Rs. 20,000 and half remained unsold in GK Ltd's godown on March 31,
Everybody can be a leader, but all cannot be effective leaders, as effective leaders have in them extra ingredients that not every leader possesses.
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Henri Fayol proposed 14 principles of management that are still widely used today. The principles include: division of work, authority and responsibility, discipline, unity of command, unity of direction, subordination of individual interests, remuneration, centralization and decentralization, scalar chain, order, equity, stability of personnel, initiative, and esprit de corps. The document provides examples and explanations for each principle. Overall, the principles aim to provide an organized, systematic approach to management through specialization, clear lines of authority, coordination of efforts, fair treatment of employees, and an emphasis on teamwork.
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issue of debentures.pptx
1. Issue of Debentures
Dr.G.KARTHIKEYAN
Assistant Professor
PG & Research Department of Commerce
(Former Controller of Examinations)
A.V.C.College (Autonomous)
Mannampandal – 609 305
Mayiladuthurai District.
Dr.G.KARTHIKEYAN - drgkavcc@gmail.com
2. ISSUE OF DEBENTURES
Debentures
Meaning: Debentures are “Creditorship Securities” issued by a company, usually for a
fixed period, at a specified rate of interest payable periodically. The company’s assets
may be given as security for the debentures but such security is not mandatory.
Joint Stock
Company
Raise Funds
Long Term
Financial Needs
Issue of Shares
Medium Term
Financial Needs
Issue of
Debentures
Sec.292(1) of the Indian Companies Act deals with borrowing powers of a company which include the
power to issue debentures.
Dr.G.KARTHIKEYAN - drgkavcc@gmail.com
3. Accounting for
Debentures
Issue of Debentures
Consideration for
Issue of Debentures
Terms relating to issue
price and condition of
redemption of
Debentures
Redemption of
Debentures
Redemption without
provision
Redemption out of
provision
Dr.G.KARTHIKEYAN - drgkavcc@gmail.com
4. Issue of
Debentures
Consideration for
Issue of Debentures
Issue of debentures
for Cash
Issue of debentures
for consideration
other than cash
Issue of debentures as
Collateral Security
Terms relating to issue
price and condition of
redemption of
Debentures
Dr.G.KARTHIKEYAN - drgkavcc@gmail.com
5. Issue of
Debentures
Consideration for Issue
of Debentures
Terms relating to issue
price and condition of
redemption of
Debentures
1. When the issue is at par, repayable at par
2. When the issue is at discount, repayable at par
3. When the issue is at premium, repayable at par
4. When the issue is at par, repayable at Premium
5. When the issue is at discount and repayable at premium
6. When the issue is at premium and repayable at premium
Dr.G.KARTHIKEYAN - drgkavcc@gmail.com
6. ISSUE OF DEBENTURES
I.Consideration for Issue of Debentures:
1. For Cash
2. For Assets
3. As Collateral Security for loans
1. Issue of debentures for Cash:
Model Journal Entries Rs. Rs.
(i) If Full amount is received in one lump sum
Bank A/c Dr.
To Debenture A/c
xxx
xxx
(ii) If cash is receivable in two or more stages
Model Journal Entries Rs. Rs.
1. For receiving debenture application money
Bank A/c Dr.
To Debenture Application A/c
xxx
xxx
2. At the time of allotment, for the application money on the allotted debentures
Debenture Application A/c Dr.
To Debentures A/c
xxx
xxx
3. For excess debenture application money
Debenture Application A/c Dr.
To Bank A/c (if money returned)
To Debenture allotment A/c (if money adjusted towards allotment)
xxx
xxx
xxx
4. For debenture allotment amount receivable
Debenture Allotment A/c Dr.
To Debentures A/c
xxx
xxx
5. For receiving debenture allotment money
Bank A/c Dr.
To Debenture Allotment A/c
xxx
xxx
6. For debenture call amount receivable
Debenture Call A/c Dr.
To Debentures A/c
xxx
xxx
7. For receiving debenture call money
Bank A/c Dr.
To Debenture Call A/c
xxx
xxx
The issue price is receivable in the form of
cash.
It may be received immediately in one
lump sum or it may be received in two or
more stages.
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7. ISSUE OF DEBENTURES
2. Issue of debentures for consideration other than Cash:
Debentures may be issued for purchase of assets or purchase of business of vendors.
(a) When Purchase of Assets
Model Journal Entries Rs. Rs.
1. When assets are acquired
Sundry Assets A/c Dr.
To Vendor A/c
xxx
xxx
2. When debentures are issued to the vendors
Vendor A/c Dr.
To Debentures A/c
xxx
xxx
(a) When purchase of business
Model Journal Entries
1. When assets and liabilities are acquired
Sundry Assets A/c Dr.
Goodwill A/c Dr.
To Sundry Liabilities A/c
To Vendor A/c
xxx
xxx
xxx
xxx
2. When debentures are issued to the vendors
Vendor A/c Dr.
To Debentures A/c
xxx
xxx
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8. ISSUE OF DEBENTURES
3. Issue of debentures as Collateral Security:
Debentures may be issued as collateral security in addition to the main security for a bank loan.
When the principal amount or interest amount or both are not paid in due time, the bank can
recover its loan and interest not only from the main security, but also from the Sale of the
debentures issued as collateral security.
Note: Debentures issued as collateral security can be treated in either of the following ways in the
accounting books of the company:
1. First Method
2. Second Method
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9. ISSUE OF DEBENTURES
3. Issue of debentures as Collateral Security:
1. First Method
• In this method issue of the debentures is
not at all recorded in the journal or ledger.
• The debentures will become a real liability
only when the loan is not repaid as per the
agreed terms. However, the following
notations are made in the liabilities side of
the Balance Sheet.
Balance Sheet
Rs.
I. Equity and Liabilities:
Non-Current Liabilities:
Long-term Borrowings:
Debentures
(In addition ____ debentures of Rs.
each have been issued as collateral security)
Bank Loan
(Secured by ___ debentures of Rs___ each as
collateral security)
xxx
xxx
II. Assets
2. Second Method
• In this method issue of the debentures is recorded in the
journal /ledger and Balance sheet.
Model Journal Entries Rs. Rs.
1. At the time of issuing the debentures as collateral security
Debenture Suspense A/c Dr.
To Debentures A/c
xxx
xxx
2. When the loan is repaid and the debentures are returned by the lender
Debentures A/c Dr.
To Debenture Suspense A/c
xxx
xxx
Balance Sheet
Rs.
I. Equity and Liabilities:
Non-Current Liabilities:
Long-term Borrowings:
Debentures
Bank Loan
xxx
xxx
II. Assets
Debenture Suspense A/c
(Debentures issued as collateral security for loan
as per contra)
xxx
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10. ISSUE OF DEBENTURES
II. Terms relating to issue price and
condition of redemption of Debentures
Model Journal Entries Rs. Rs.
1. When the issue is at par, repayable at par
Bank A/c Dr.
To Debentures A/c
xxx
xxx
2. When the issue is at discount, repayable at par
Bank A/c Dr.
Discount on issue of Debentures A/c Dr.
To Debentures A/c
xxx
xxx
xxx
3. When the issue is at premium, repayable at par
Bank A/c Dr.
To Debentures A/c
To Securities Premium A/c
xxx
xxx
xxx
4. When the issue is at par, repayable at premium
Bank A/c Dr.
Loss on issue of Debentures A/c Dr.
To Debentures A/c
To Premium on redemption of Debentures A/c
xxx
xxx
xxx
xxx
5. When the issue is at discount and repayable at premium
Bank A/c Dr.
Discount on issue of Debentures A/c Dr.
Loss on issue of Debentures A/c Dr.
To Debentures A/c
To Premium on redemption of Debentures A/c
xxx
xxx
xxx
xxx
xxx
6. When the issue is at premium and repayable at premium
Bank A/c Dr.
Loss on issue of Debentures A/c Dr.
To Debentures A/c
To Securities Premium A/c
To Premium on redemption of Debentures A/c
xxx
xxx
xxx
xxx
xxx
The issue may be made at ‘par’ or
at ‘discount’ or at ‘premium’.
The redemption may be made at
‘par’ or at ‘discount’ or at
‘premium’.
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