Write a note on ‘Debentures issued at a discount.’

1.	Write a note on ‘Debentures issued at a discount.’
Answer» When the debentures are issued at less than their face value, they are said to be have been issued at discount, e.g. A debenture of ₹ 100 face value is issued at ₹ 80 then ₹ 20 would be discount. As per Companies Act, there is no restriction regarding maximum discount to be given on the issue of debentures. If there is no restriction in the Articles of Association of the company, debenture can be issued at discount. Amount of discount on debentures is debited to ‘Discount on Debenture A/c’. Amount of debenture discount or loss on issue of debenture is shown in the balance sheet as per Accounting Standard-26. Debenture discount amount is shown under different heads which depends on terms of debentures.

Answer»

When the debentures are issued at less than their face value, they are said to be have been issued at discount, e.g. A debenture of ₹ 100 face value is issued at ₹ 80 then ₹ 20 would be discount. As per Companies Act, there is no restriction regarding maximum discount to be given on the issue of debentures. If there is no restriction in the Articles of Association of the company, debenture can be issued at discount.
Amount of discount on debentures is debited to ‘Discount on Debenture A/c’.

Amount of debenture discount or loss on issue of debenture is shown in the balance sheet as per Accounting Standard-26. Debenture discount amount is shown under different heads which depends on terms of debentures.

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