What are the journal entries when debentures issue on premium?

The premium on the issue of debentures is credited to the Securities Premium A/c as per section 78 of the Companies Act, 1956. Journal entry will be as follows : Debentures Allotment A/c Dr To Debentures Account To Securities Premium A/c (Amount due on allotment alongwith premium of Rs ….)

How do you record the issue of debentures in accounting?

When debentures are issued at discount, the amount of discount is debited to ‘Discount on Issue of Debentures Account. The amount of discount should be shown on the asset side of the Balance Sheet, under the head ‘Miscellaneous Expenditure, until written off.

Where is premium on issue of debentures shown in balance sheet?

The amount of premium is credited to Securities Premium account and is shown on the liabilities side of the balance sheet under the head “Reserves and Surpluses”.

What is the accounting treatment of loss on issue of debentures?

The amount of loss or discount on issue of debentures has to be not be written-off during the year of its issue since the benefit of the debentures would accumulate to the enterprise till their restitution or redemption. The loss or discount, hence, considered as a capital loss.

What is the treatment of premium on redemption of debentures in cash flow statement?

Premium on Redemption of Debentures/Shares is subtracted in the Cash Flow from Financing Activities because it is outflow of Cash (financing nature).

Is premium on issue of debentures and income?

Debentures are said to be issued at a premium when the amount collected for it, is greater than the nominal value (face value) of the debentures. There are different journal entries in connection with the issue of debentures: On the receipt of Application Money.

What is the treatment of discount on issue of debentures in cash flow statement?

The increase in discount should be deducted from the face value of shares / Debentures and only net proceeds shall be treated as cash flow from Financing Activities. Decrease in Discount on issue of Shares/Debentures will be added back to current year’s profit to calculate ‘Cash from Operating Activities’.

Why premium on redemption of debentures is personal account?

CBSE Board Exam – Accountancy Debentures are a short or medium type debt instrument that helps in increasing funds. This tool is mostly used by huge companies so that they can raise large amounts of money but at a fixed interest rate. Any liability is a personal account.

How do you treat premium on redemption of debentures in cash flow statement?

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