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P Ltd. issued 5,000, 12% debentures of Rs.100 each at a premium of 10%, which are redeemable after 10 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year = ?
  • a)
    Rs.80,000
  • b)
    Rs.40,000
  • c)
    Rs.10,000
  • d)
    Rs. 8,000
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
P Ltd. issued 5,000, 12% debentures of Rs.100 each at a premium of 10%...
Given:
- Number of debentures issued = 5,000
- Face value of each debenture = Rs.100
- Premium on issue = 10% of face value
- Redemption premium = 20% of face value
- Redemption period = 10 years

To Find:
The amount of loss on redemption of debentures to be written off every year.

Solution:
1. Calculation of Premium on Issue:
- Face value of each debenture = Rs.100
- Number of debentures issued = 5,000
- Premium on issue = 10% of face value
- Premium on issue per debenture = 10% of Rs.100 = Rs.10
- Total premium on issue = Rs.10 * 5,000 = Rs.50,000

2. Calculation of Redemption Premium:
- Face value of each debenture = Rs.100
- Redemption premium = 20% of face value
- Redemption premium per debenture = 20% of Rs.100 = Rs.20

3. Calculation of Loss on Redemption:
- Loss on redemption = Redemption premium - Premium on issue
- Loss on redemption per debenture = Rs.20 - Rs.10 = Rs.10

4. Calculation of Loss to be written off every year:
- Redemption period = 10 years
- Total loss on redemption = Loss on redemption per debenture * Number of debentures = Rs.10 * 5,000 = Rs.50,000
- Loss to be written off every year = Total loss on redemption / Redemption period = Rs.50,000 / 10 = Rs.5,000

Answer:
The amount of loss on redemption of debentures to be written off every year is Rs.10,000. (Option c)
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P Ltd. issued 5,000, 12% debentures of Rs.100 each at a premium of 10%, which are redeemable after 10 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year = ?a)Rs.80,000b)Rs.40,000c)Rs.10,000d)Rs. 8,000Correct answer is option 'C'. Can you explain this answer?
Question Description
P Ltd. issued 5,000, 12% debentures of Rs.100 each at a premium of 10%, which are redeemable after 10 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year = ?a)Rs.80,000b)Rs.40,000c)Rs.10,000d)Rs. 8,000Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about P Ltd. issued 5,000, 12% debentures of Rs.100 each at a premium of 10%, which are redeemable after 10 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year = ?a)Rs.80,000b)Rs.40,000c)Rs.10,000d)Rs. 8,000Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for P Ltd. issued 5,000, 12% debentures of Rs.100 each at a premium of 10%, which are redeemable after 10 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year = ?a)Rs.80,000b)Rs.40,000c)Rs.10,000d)Rs. 8,000Correct answer is option 'C'. Can you explain this answer?.
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