What is meant by ‘Issue of debenture at discount and redeemable at premium? The issue of debenture for consideration other than cash serves the purpose of both the vendor as well as of the purchaser (company). This is known as issue of debenture for consideration other than cash.
If a company purchases assets from its suppliers or vendors, then instead of paying them in cash the company issues debentures to them.
What is meant by ‘Issue of debentures for Consideration other than Cash? The lender who receives debenture as collateral security is not entitled for interest on these debentures. Sometimes, when a company takes loan from a financial institution, then besides the primary security, the company may issue debenture for additional security (as collateral security). The term collateral security means additional or secondary security in addition to the primary security. State the meaning of ‘Debentures issued as a Collateral Security’. Interests on such debentures are paid to the persons who produce the interest coupons that are attached with these debentures in a specified bank. When a company does not maintain any record of the debenture holders and the debenture is transferable mere by delivery, then the type of the debenture held by the holders is termed as Bearer Debenture. Debentures are issued by a company for acquiring long-term borrowings. A debenture is issued in the form of a certificate under the seal of a company and containing a contract for the repayment of the principal sum after a fixed period of time and payment of interest at regular intervals, generally half yearly.
The word Debenture is derived from a Latin word ‘debere’ which means to borrow. 2nd PUC Accountancy Issue and Redemption of Debentures NCERT Textbook Questions and AnswersĢnd PUC Accountancy Issue and Redemption of Debentures Short Answer Type Questions and Answers
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