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

Chapter 2: Issue and Redemption of Debentures is a chapter in Class 12 Accountancy (Part 2), part of the CBSE NCERT curriculum followed by over 25 million students across India. This chapter covers 9 topics including Meaning of Debentures and Distinction from Shares, Classification and Types of Debentures, Accounting for Issue of Debentures for Cash. BrainWeave provides free AI-powered explanations — by voice or text, in Hindi or English — with no signup required.

Get Instant Solutions from AI Tutor → Read Chapter Summary

What you'll learn

▸Meaning of Debentures and Distinction from SharesCore concept

debenturesharedebt capitalowned capitalinterest vs dividend
▸Classification and Types of DebenturesCore concept

secured debenturesredeemable debenturesconvertible debentureszero coupon bondbearer debentures
▸Accounting for Issue of Debentures for CashCore concept

issue at parissue at premiumissue at discountdebenture applicationjournal entries
▸Issue of Debentures for Consideration Other than CashCore concept

consideration other than cashpurchase considerationvendorasset purchasebusiness purchase
▸Issue of Debentures as Collateral Security

collateral securitydebenture suspenseloanbalance sheet presentationaccounting methods
▸Accounting for Issue of Debentures with Terms of Redemption

terms of redemptionpremium on redemptionloss on issue of debenturesredeemable at premiumissue entries
▸Writing off Discount or Loss on Issue of Debentures

writing offamortizationcapital lossstatement of profit and losssecurities premium
▸Methods and Accounting for Redemption of DebenturesCore concept

redemptionlump sumdraw of lotsopen market purchaseprofit on redemption
▸Debenture Redemption Reserve (DRR) and Sinking FundCore concept

Debenture Redemption ReserveDRRsinking fundredemption fundinvestment

Chapter Summary

Understand the definition of a debenture as a written instrument acknowledging debt, and distinguish it from a share based on ownership, return (interest vs. dividend), repayment terms, voting rights, and security.

Differentiate between various types of debentures based on security (secured/unsecured), tenure (redeemable/irredeemable), convertibility (convertible/non-convertible), coupon rate (specific/zero coupon), and registration (registered/bearer).

Record the journal entries for the issue of debentures for cash at par, premium, and discount. This includes accounting for money received in a lump sum or in installments (application, allotment, calls).

Learn the accounting treatment for issuing debentures to vendors for the purchase of assets or a business. This involves calculating the purchase consideration and recording the necessary journal entries.

Understand the concept of issuing debentures as additional security for a loan and learn the two methods of accounting and its presentation in the company's balance sheet.

Record journal entries for the issue of debentures while considering the conditions of redemption, specifically accounting for a premium payable on redemption by recognizing a 'Loss on Issue of Debentures' at the time of issue itself.

Understand that discount or loss on issue of debentures is a capital loss that must be written off during the tenure of the debentures, using either the Securities Premium account or the Statement of Profit and Loss.

Learn the different methods for redeeming debentures, such as payment in lump sum, in installments (by draw of lots), or by purchase in the open market, and the associated accounting entries.

Understand the legal requirements and accounting treatment for creating a Debenture Redemption Reserve (DRR) and a Sinking Fund (or Debenture Redemption Fund) for the purpose of redeeming debentures.

Practice Questions from this Chapter

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

Explain debentures simply. Get Solution →
Compare shares and debentures. Get Solution →
Illustrate company borrowing with debentures. Get Solution →
What is the Latin word from which 'debenture' is derived? Get Solution →
What is the return paid to debenture holders called? Get Solution →
What does a debenture represent in relation to a company? Get Solution →
Debentures that can be converted into equity shares are known as what? Get Solution →
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.

Frequently Asked Questions

How many topics are covered in this chapter?

This chapter covers 9 key topics: 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, and more. The BrainWeave AI tutor explains each one with examples.

Is Chapter 2: Issue and Redemption of Debentures important for board exams?

Yes — Class 12 is a CBSE board exam year, and every NCERT chapter is part of the syllabus. Use BrainWeave's AI tutor to master this chapter, then practice with the auto-generated quizzes and mind maps.

Can I get NCERT solutions for this chapter in Hindi?

Yes. BrainWeave's AI tutor supports Hindi, English, and Hinglish for both voice and text chat. Just ask your question in your preferred language.

Is BrainWeave free for Class 12 - Commerce?

Yes. BrainWeave's free Spark plan gives generous daily messages — enough for regular homework. Premium features unlock when you bring your own free Google Gemini API key.

Can I use voice chat for this chapter?

Absolutely. Tap the mic, ask any question about Chapter 2: Issue and Redemption of Debentures, and the AI tutor will explain it back in voice and text.

How is BrainWeave better than static NCERT solutions sites?

Static solution sites give the same answer to everyone. BrainWeave adapts to your question — ask "explain like I'm 12" or "give a real-world example" and get a personalized response. Voice mode and Hindi support work seamlessly.

Related Chapters

Chapter 1: Accounting for Share Capital

Chapter 3: Financial Statements of a Company

Chapter 5: Accounting Ratios

Chapter 6: Cash Flow Statement

Chapter 4: Analysis of Financial Statements

Ask Any Question About Chapter 2: Issue and Redemption of Debentures

Voice or text. Hindi or English. Free to start. No signup required.

Start Now →