CA Foundation Exam > CA Foundation Questions > Discount on issue of debentures is a ________...
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Discount on issue of debentures is a ____________.
- a)Revenue loss to be charged in the year of issue
- b)Capital loss to be written off from capital reserve
- c)Capital loss to be written off over the tenure of the debentures
- d)Capital loss to be shown as goodwill
Correct answer is option 'C'. Can you explain this answer?
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Discount on issue of debentures is a ____________.a)Revenue loss to be...
Explanation:
Discount on issue of debentures refers to the issue of debentures at a price lower than their face value. This discount is a capital loss to be written off over the tenure of the debentures. The following points explain this concept in detail:
Capital Loss: The discount on issue of debentures represents a capital loss to the company. It reduces the amount of capital that the company can raise from the issue of debentures.
Writing off the Loss: The capital loss on account of discount on issue of debentures is written off over the tenure of the debentures. This means that a portion of the loss is charged to the Profit and Loss Account each year until the debentures are redeemed.
Amortization: The process of writing off the capital loss over the tenure of the debentures is called amortization. It involves the calculation of the annual amount of loss to be charged to the Profit and Loss Account.
Accounting Treatment: The discount on issue of debentures is shown as a liability in the Balance Sheet. The amount of discount is deducted from the face value of the debentures to arrive at the amount of debentures issued. The capital loss on account of the discount is shown as a separate item in the Balance Sheet.
Conclusion:
Discount on issue of debentures is a capital loss that is written off over the tenure of the debentures. The process of writing off this loss is called amortization. The discount is shown as a liability in the Balance Sheet and the capital loss is shown as a separate item in the Balance Sheet.
Discount on issue of debentures refers to the issue of debentures at a price lower than their face value. This discount is a capital loss to be written off over the tenure of the debentures. The following points explain this concept in detail:
Capital Loss: The discount on issue of debentures represents a capital loss to the company. It reduces the amount of capital that the company can raise from the issue of debentures.
Writing off the Loss: The capital loss on account of discount on issue of debentures is written off over the tenure of the debentures. This means that a portion of the loss is charged to the Profit and Loss Account each year until the debentures are redeemed.
Amortization: The process of writing off the capital loss over the tenure of the debentures is called amortization. It involves the calculation of the annual amount of loss to be charged to the Profit and Loss Account.
Accounting Treatment: The discount on issue of debentures is shown as a liability in the Balance Sheet. The amount of discount is deducted from the face value of the debentures to arrive at the amount of debentures issued. The capital loss on account of the discount is shown as a separate item in the Balance Sheet.
Conclusion:
Discount on issue of debentures is a capital loss that is written off over the tenure of the debentures. The process of writing off this loss is called amortization. The discount is shown as a liability in the Balance Sheet and the capital loss is shown as a separate item in the Balance Sheet.
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Discount on issue of debentures is a ____________.a)Revenue loss to be...
Discount on issue of debentures is a capital loss and over a period of 3 to 5 years or is charged to “Securities Premium Account” as per the guidelines issued by ICAI. The discount on issue of debentures can be written-off either by debiting it to profit and loss or to securities premium account.
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Discount on issue of debentures is a ____________.a)Revenue loss to be charged in the year of issueb)Capital loss to be written off from capital reservec)Capital loss to be written off over the tenure of the debenturesd)Capital loss to be shown as goodwillCorrect answer is option 'C'. Can you explain this answer?
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Discount on issue of debentures is a ____________.a)Revenue loss to be charged in the year of issueb)Capital loss to be written off from capital reservec)Capital loss to be written off over the tenure of the debenturesd)Capital loss to be shown as goodwillCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Discount on issue of debentures is a ____________.a)Revenue loss to be charged in the year of issueb)Capital loss to be written off from capital reservec)Capital loss to be written off over the tenure of the debenturesd)Capital loss to be shown as goodwillCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Discount on issue of debentures is a ____________.a)Revenue loss to be charged in the year of issueb)Capital loss to be written off from capital reservec)Capital loss to be written off over the tenure of the debenturesd)Capital loss to be shown as goodwillCorrect answer is option 'C'. Can you explain this answer?.
Discount on issue of debentures is a ____________.a)Revenue loss to be charged in the year of issueb)Capital loss to be written off from capital reservec)Capital loss to be written off over the tenure of the debenturesd)Capital loss to be shown as goodwillCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Discount on issue of debentures is a ____________.a)Revenue loss to be charged in the year of issueb)Capital loss to be written off from capital reservec)Capital loss to be written off over the tenure of the debenturesd)Capital loss to be shown as goodwillCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Discount on issue of debentures is a ____________.a)Revenue loss to be charged in the year of issueb)Capital loss to be written off from capital reservec)Capital loss to be written off over the tenure of the debenturesd)Capital loss to be shown as goodwillCorrect answer is option 'C'. Can you explain this answer?.
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Discount on issue of debentures is a ____________.a)Revenue loss to be charged in the year of issueb)Capital loss to be written off from capital reservec)Capital loss to be written off over the tenure of the debenturesd)Capital loss to be shown as goodwillCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for Discount on issue of debentures is a ____________.a)Revenue loss to be charged in the year of issueb)Capital loss to be written off from capital reservec)Capital loss to be written off over the tenure of the debenturesd)Capital loss to be shown as goodwillCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of Discount on issue of debentures is a ____________.a)Revenue loss to be charged in the year of issueb)Capital loss to be written off from capital reservec)Capital loss to be written off over the tenure of the debenturesd)Capital loss to be shown as goodwillCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
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