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When debentures are redeemed out of capital, no transfer is made
to general reserve or debenture redemption reserve account. In this method it is assumed that the company has sufficient funds to redeem the debentures. So the profits are not utilised to replace the debentures.It affects adversely to the Working Capital of the company.
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Examine Debenture can be redeemed only out of capital?
No Debentures can not be redeemed out of capital only. Gov of India and SEBI has indirectly placed restrictions on redemption of debentures. Now it is compulsory to create Debenture Redemption Reserve at-least 50% of the debentures issued.
What is the journal entry for redemption of debentures which were issued at discount?
debit redemption of debentures accountcredit cash / bank
Discount on issue of debentures is a?
capital loss to be written off over the tenure of the debentures .
Why are the type of debentures?
Debentures are categorized based on various characteristics, such as security, convertibility, and redemption. Secured debentures are backed by collateral, while unsecured debentures rely on the issuer's creditworthiness. Convertible debentures can be transformed into equity shares, while non-convertible debentures cannot. Additionally, redeemable debentures have a fixed maturity date for repayment, whereas irredeemable debentures do not have a set repayment term.
After redemption of debenture debenture reduption reserve where to transfer whether in PL Ac or in General reserve.?
After redemption of debentures, debenture redemption reserve is to be transferred to general reserve.
What is redemption of debentures using purchase of own debenture?
A company can buy its own debenture in the open market, if it is authorised by its AOA. the debentures so purchased can be used either for immediate cancellation or redemption of debenture or for investment. the debenture so purchase for investment can be subsequently either be issued to fullfill additional requirements of cash or can be cancelled if the company so desires. debentures when purchases for investment are popularly known as 'OWN DEBENTURES.'
What is meant by loan capital?
short term and long term liabilities, which have due dates and the interest is paid. for example , debentures. compnay raises funds by issuing debentures and thes funds are loan capital. which means capital raised by loan.
What is the difference between conversion and redemption of debentures?
Conversion of debentures refers to the process by which debenture holders can exchange their debentures for equity shares of the issuing company, often at a predetermined conversion ratio. Redemption, on the other hand, involves the repayment of the debenture's face value to the debenture holders at maturity or upon a specified date, without converting them into shares. Essentially, conversion changes the nature of the investment from debt to equity, while redemption involves settling the debt obligation in cash.
What are the uses of share premium?
Share premium is used for many purposes and 1 of them is redemption of preference shares and debentures
Can debentures be encashed?
Debentures can be encashed. However, if this is done prior to maturity but after one year, the owner will be required to pay capital gains tax on the return.
Why debenture redemption reserve is transfer to general reserve?
When debentures are redeemed payment is made from a reserve which is created at the time of purchase of such debentures,therefore at the time of payment first it is transferred to general reserve then as it is expenditure to company.
What do you mean by ex-interest in issue and redemption of debentures in company account?
Whan compay purchase debenture from the open market
