What is the correct accounting treatment of debentures issued as collateral security ........

Accountancy (CUET) Accounting For Debentures

ABC Ltd. issued 2,000 debentures of ?1,000 each at a premium of 10% on January 1, 2022. The debentures are secured and redeemable after 4 years. The company decided to pay interest annually at a rate of 9% per annum. The company also issued some debentures as collateral security for a loan taken from a bank. Answer the following questions:

What is the correct accounting treatment of debentures issued as collateral security?

They are recorded as a liability in the Balance Sheet.

They are recorded only in the notes to accounts.

They are treated as an income for the company.

They are recorded under "Other Current Liabilities."

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Explanation:

Accounting Treatment of Debentures Issued as Collateral Security

Debentures issued as collateral are not recorded in the main accounts but only disclosed in Notes to Accounts.
Correct Answer: They are recorded only in the notes to accounts.