Class 12 Accountancy — Chapter 2: Issue and Redemption of Debentures

What you'll learn

• ▸Meaning of Debentures and Distinction from Shares
• ▸Classification and Types of Debentures
• ▸Accounting for Issue of Debentures for Cash
• ▸Issue of Debentures for Consideration Other than Cash
• ▸Issue of Debentures as Collateral Security
• ▸Accounting for Issue of Debentures with Terms of Redemption
• ▸Writing off Discount or Loss on Issue of Debentures
• ▸Methods and Accounting for Redemption of Debentures
• ▸Debenture Redemption Reserve (DRR) and Sinking Fund

Chapter Summary

--- PAGE 1 --- 12128CH02 Issue and Redemption of Debentures 2 LEARNING OBJECTIVES After studying this chapter you will be able to: • state the meaning of debenture and explain the difference between debentures and shares; • describe various types of debentures; • record the journal entries for the issue of debentures at par, at a discount and at premium; • explain the concept of debentures issued for consideration other than cash and the accounting thereof; • explain the concept of issue of debentures as a collateral security and the accounting thereof; • record the journal entries for issue of debentures with various terms of issue, terms of redemption; • show the items relating to issue of debentures in company's balance sheet; • describe the methods of writing-off discount/loss on issue of debentures; • explain the methods of redemption of debentures and the a…

Practice Questions from this Chapter

Tap "Get Solution" on any question to ask our AI tutor.

1. Explain debentures simply. Get Solution →
2. Compare shares and debentures. Get Solution →
3. Illustrate company borrowing with debentures. Get Solution →
4. What is the Latin word from which 'debenture' is derived? Get Solution →
5. What is the return paid to debenture holders called? Get Solution →
6. What does a debenture represent in relation to a company? Get Solution →
7. Debentures that can be converted into equity shares are known as what? Get Solution →
8. Which type of debenture can be transferred by way of simple delivery? Get Solution →

Did you know?

• 💡 Ancient Sumerians used clay tablets to record debts over 5,000 years ago.
• 💡 Some historical bonds were printed on elaborate, beautiful paper with intricate designs.
• 💡 The term "bond" comes from "binding," referring to the issuer's obligation to pay.
• 💡 Perpetual bonds are real financial instruments that never mature, paying interest forever.
• 💡 The world's smallest stock exchange is located on the island of Bermuda.

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