A Ltd wants to redeem 5 000 5 Debentures of Rs 100 each at 5 premium How much amount it must transfe...........

General Accounting Principles Accounting For Debentures

A Ltd. wants to redeem 5,000, 5% Debentures of Rs 100 each at 5% premium. How much amount it must transfer to Debenture Redemption Reserve?

Rs 1,25,000

Rs 50,000

Rs 2,00,000

Rs 2,50,000

- A Ltd. is set to redeem 5,000 debentures, each valued at Rs 100, at a 5% premium.

- The face value for redemption totals Rs 5,00,000.

- Companies must create a Debenture Redemption Reserve (DRR), transferring at least 25% of the face value.

- Calculating 25% of Rs 5,00,000 equals Rs 1,25,000.

- An additional 5% premium does not affect the DRR requirement, which is based solely on face value.

- Options provided are:

- Rs 1,25,000

- Rs 50,000

- Rs 2,00,000

- Rs 2,50,000

- Option 1: Rs 1,25,000 is the correct and exact amount for the DRR.

Submit Error

In DRR 10% and DRI 15% in the year of redemption as per above lecture please clarify it

NIHARIKA WALIA

your point is correct and the mcq is also corrected. Thank you for the input