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Direction: Choose the correct answer to the following questions from the given alternatives:
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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Direction: Choose the correct answer to the following questions from t...
Explanation:
Capital Loss:
- Discount on issue of debentures represents a capital loss as it is a reduction in the value of the debentures issued by the company.
Writing off:
- This capital loss is written off over the tenure of the debentures because it is not a one-time expense but rather spread out over the period for which the debentures are outstanding.
Amortization:
- The process of writing off the discount on issue of debentures over the tenure of the debentures is known as amortization. It involves allocating a portion of the discount as an expense in each accounting period.
Matching Principle:
- This method of writing off the discount is in line with the matching principle of accounting, which requires expenses to be recognized in the same period as the revenue they help to generate.
Impact on Financial Statements:
- By spreading out the capital loss over the tenure of the debentures, the impact on the company's financial statements is more accurately reflected, as it shows the gradual reduction in the value of the debentures over time.
Therefore, the correct answer is option 'C', as the discount on issue of debentures is a capital loss to be written off over the tenure of the debentures.
Capital Loss:
- Discount on issue of debentures represents a capital loss as it is a reduction in the value of the debentures issued by the company.
Writing off:
- This capital loss is written off over the tenure of the debentures because it is not a one-time expense but rather spread out over the period for which the debentures are outstanding.
Amortization:
- The process of writing off the discount on issue of debentures over the tenure of the debentures is known as amortization. It involves allocating a portion of the discount as an expense in each accounting period.
Matching Principle:
- This method of writing off the discount is in line with the matching principle of accounting, which requires expenses to be recognized in the same period as the revenue they help to generate.
Impact on Financial Statements:
- By spreading out the capital loss over the tenure of the debentures, the impact on the company's financial statements is more accurately reflected, as it shows the gradual reduction in the value of the debentures over time.
Therefore, the correct answer is option 'C', as the discount on issue of debentures is a capital loss to be written off over the tenure of the debentures.
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Direction: Choose the correct answer to the following questions from t...
Discount on issue of debentures:
- Capital loss: The discount on issue of debentures is considered as a capital loss.
- Writing off: This capital loss should be written off over the tenure of the debentures.
- Spread over time: The discount is not treated as a revenue loss to be charged in the year of issue, but rather as a capital loss to be spread out over the life of the debentures.
- Impact on financial statements: Writing off the discount over time affects the balance sheet and income statement accordingly.
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Direction: Choose the correct answer to the following questions from the given alternatives: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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Direction: Choose the correct answer to the following questions from the given alternatives: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? 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 Direction: Choose the correct answer to the following questions from the given alternatives: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? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Direction: Choose the correct answer to the following questions from the given alternatives: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?.
Direction: Choose the correct answer to the following questions from the given alternatives: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? 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 Direction: Choose the correct answer to the following questions from the given alternatives: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? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Direction: Choose the correct answer to the following questions from the given alternatives: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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ample number of questions to practice Direction: Choose the correct answer to the following questions from the given alternatives: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? tests, examples and also practice CA Foundation tests.
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