CA Foundation Exam > CA Foundation Questions > Loss on issue of debentures is treated as ___...
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Loss on issue of debentures is treated as ____________.
- a)Intangible asset
- b)Current asset
- c)Current liability
- d)Miscellaneous expenditure
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
Loss on issue of debentures is treated as ____________.a)Intangible as...
Loss on issue of debentures is treated as Miscellaneous expenditure.
Explanation:
- Loss on issue of debentures refers to the situation when the company issues debentures at a discount, i.e., at a value lower than their face value.
- This discount is considered as a loss for the company.
- The treatment of this loss is categorized as miscellaneous expenditure.
- Miscellaneous expenditure refers to expenses that do not directly contribute to the generation of revenue or the acquisition of assets.
- Loss on issue of debentures falls under this category as it is a one-time expense that does not result in the acquisition of any tangible or intangible assets.
- It is important to note that miscellaneous expenditure is shown as an expense in the income statement and is not considered as an asset or liability.
- Therefore, the correct answer is D: Miscellaneous expenditure.
Explanation:
- Loss on issue of debentures refers to the situation when the company issues debentures at a discount, i.e., at a value lower than their face value.
- This discount is considered as a loss for the company.
- The treatment of this loss is categorized as miscellaneous expenditure.
- Miscellaneous expenditure refers to expenses that do not directly contribute to the generation of revenue or the acquisition of assets.
- Loss on issue of debentures falls under this category as it is a one-time expense that does not result in the acquisition of any tangible or intangible assets.
- It is important to note that miscellaneous expenditure is shown as an expense in the income statement and is not considered as an asset or liability.
- Therefore, the correct answer is D: Miscellaneous expenditure.
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Loss on issue of debentures is treated as ____________.a)Intangible assetb)Current assetc)Current liabilityd)Miscellaneous expenditureCorrect answer is option 'D'. Can you explain this answer?
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