1. If company gets less application than issued debenture then keeping number of application received into account, do all the necessary accounting entries.

2. If there is more application received than the debenture issued of the company then the additional money will be return to the debenture applicants.
Regarding this, debited Debenture application A/c and credited Bank A/c.
Then after do all the entries keeping allotment of the debenture into account.

3. In case of getting amount in advance from the debenture holders on allotment or calls of debentures:

• Regarding advanced received amount on allotment, credited to Debenture Allotment A/c and advance received amount on calls then credited to Calls in advance A/c
• When amount of call on debenture is actual received then it is debited to Bank A/c and Calls in advance A/c and credited Debenture calls A/c.

4. If any debenture holder is not paid the amount of allotment of debenture or calls on debenture in time then in such circumtances.

• Amount not received from debentureholders will be transferred to Calls-in-arrears A/c and credited to Debenture allotment A/c or Debenture calls A/c.
• If such amount is received from debentureholders in future then that amount is debited to Bank A/c and credited to Calls-in-arrears A/c.

5. Debentures are company’s debt so that if any debentureholder does not pay amount of installment then debenture can not be forfeited.

6. When the full amount of debenture is called up at the time of application, then debited to Bank A/c and credited to Debenture application and allotment A/c.

7. If debenture issued at premium then that amount of premium is transferred to “Security Premium Reserve A/c”. It is capital profit.

8. If company issued debenture at discount then this discount amount is debited to Debenture discount A/c. Debenture discount or amount of loss at the time of issuing debenture-is capital loss. Generally this amount is written off against Security premium Reserve A/C dr Profit and loss statement.

9. When a company purchase any business and issue more debenture to vendor’s against purchase consideration then the difference amount is transferred to Goodwill A/c and if paid less amount then that difference amount is transferred to Capital Reserve A/c.
In short, Goodwill = Purchase consideration of business – Net assets
Capital Reserve = Net Assets – Purchase consideration

10. When debentures are redeemed at premium then that premium amount is debited to Loss on issue of debenture A/c and credited to Debenture redemption premium A/c. Debenture redemption premium is a debt of company:

11. As per the rule 18(7)(c) of the Companies rule 2014, company required to deposit or invest, a sum which shall not be less then 15% of the total face value of the debentures to be redeemed at the end of the year i.e. during the ending on 31st March, on or before 30th April, i.e. beginning of the year.

12. According to section 71(4) of the Companies Act, 2013 and as per the guideline of SEBI, it is necessary to create debenture redemption reserve account equivalent to fixed % of the total face value of issued debentures before redemption commence.

• When debentures are redeemable at the end of the financial year then, at the end of the year amount transferred to Debenture Redemption Reserve A/c from surplus in Statement of profit and loss of the respective year.
• If payment of redemption of debentures is to be done from capital then, an amount transferred from surplus in Statement of profit and loss to Debenture Redemption Reserve A/c is 25% and if it is to be done from profit then, an amount transferred from surplus in Statement of profit and loss to Debenture Redemption Reserve A/c is 100% of total face value or nominal value of redemption of debentures.
• When debentures are redeemable during any time in between the financial year then required amount is to be transferred from surplus in Statement of profit and loss of the previous year to Debenture Redemption Reserve A/c. The amount to be transferred to Debenture Redemption Reserve A/c.
• If there is no clarification regarding required amount of redemption of debentures which is out of capital or out of profit then, calculate with the assumption that company has paid out of capital.

13. Profit on redemption of debentures is capital profit which is transferred to capital reserve account and when investment in own debentures may be sold by company in open market then profit realised from it is treaded as revenue profit and transferred to Statement of profit and loss.

14. When debentures are converted into shares by the company then shares may be issued to debentureholders at par or at premium. These shares may not be issued at discount, otherwise it violates the provisions of Companies Act.

15. Company can redeem the debenture in different considerations:

• By Cash
• By Giving new equity share or preference share
• By Giving new debentures.