Write a note on 'Debentures issued at a premium. - Vidyadip

Question

Write a note on 'Debentures issued at a premium.

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Answer

When the debentures are issued at more than their face value they are said to be have been issued at premium.

As per Companies Act $2013,$ premium amount on debentures is transferred to Securities Premium Reserve Account.

Debenture premium is a capital profit and can be used to write off capital loss.
Debenture premium cannot be used for distribution of dividend.
Securities Premium Reserve A/C is shown on the equity and Liabilities side of the balance sheet under the heading 'Reserve and Surplus'.

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