Explore topic-wise InterviewSolutions in Current Affairs.

(a) Barrier method – Condom.

(b) Chemical method – Oral pills.

(c) Surgical method – Vasectomy.

Under regional variation, at some place, there is desert, at other place, there is mountain range, there is plateau in the south and plain in the east. Thus, the variation on the basis of dual-physical condition is known as regional variation.

In the above mentioned places check dams are built because here water harvesting is difficult.

(a) 1991-92 and 2002-03

From the south-west to the north-east of the state.

The Fame brought envy, detraction, calumny, hate and at last pity including miseries and bitterness in the life.

प्रसिद्धि अपने साथ ईष्र्या, बदनामी, दूरी, घृणा तथा अन्त में जीवन में दया, कष्ट तथा कड़वाहट लेकर आई। .

(a) Rs. 4,200 

The steps involved in creation of Sinking Fund on redemption of Debenture are: 

(i) Calculate the amount of profit to be set-aside annually with the help of sinking fund table. 

(ii) Set aside the amount of profit at the end of each year and credit to Debenture Redemption Fund (DRF) Account. 

(iii) Purchase the investments of the equivalent amount at the end of first year and debit Debenture Redemption Fund Investment (DRFI) Account. 

(iv) Receive interest on investment at the end of each subsequent year. 

(v) Purchase the investments equivalent to the fixed amount of profit set aside and the interest earned every year except last year (year of redemption). 

(vi) Receive interest on investment for the last year. 

(vii) Set aside the fixed amount of profit for the last year. 

(viii) Encash the investments at the end of the year of redemption. 

(ix) Transfer the profit/loss on sale of investments reflected in the balance of Debenture Redemption Fund Investment Account to Debenture Redemption Fund Account. 

(x) Make payment to debenture holders. 

(xi) Transfer Debenture Redemption Fund A/c balance to General Reserve.

Yes, a company, if authorised by its Articles of Association, can purchase its own debentures in the open market. 

The main purposes of such purchase may be as follows 

(i) A company may purchase its own debenture for immediate cancellation for reducing the debenture liability especially in case when the interest rate on its debenture is higher than the market rate of interest. 

(ii) A company may also purchase its own debentures with the motive of investment and sell them at higher price in future and thereby earn profit.

(c) The company purchase from the market and keeps them as investments

Yes, a company can purchase its own debentures provided it is authorised by its Article of Association. As per the Company Act, if a company is authorised by its Article of Association, only then it may purchase its own debentures from the open market.

A company, if authorised by its Articles of Association, can redeem its own debentures by purchasing them in the open market. 

This is advantageous for several reasons 

(I) It would be saving the amount of interest on debentures purchased and cancelled. 

(ii) Sometimes the own debentures are being sold at a discount. It would enable the company to save money equai to the amount of discount i.e., profit on redemption of debentures. 

(iii) Debentures so purchased may be kept alive as investment. In need of fund, they can again be sold off in the market. 

Objectives There may be the following objectives for purchasing own debentures in the open market 

(i) For immediate cancellation of debentures. 

(ii) For investment in the own debentures.

When a debenture holder can convert his/her debentures into shares or new debentures after – the expiry of a specified period of time, then it is known as redemption of debentures by conversion. As the company do not need to pay any funds for the redemption, so there is no need to maintain the Debenture Redemption Reserve (DRR). The new shares or debentures may be issued at par, premium or at discount.

Redemption of debenture means repayment of debentures by the company to the debenture holders. In other words, it implies the discharge of liabilities by repaying the amount due to the debenture holders as per the terms and conditions determined at the time of issue of debentures. Debentures may be redeemable at par, premium or discount, but, now a day, these are mostly redeemable at par or premium.

When the debentures are redeemed at a price more than its face value or the par value, then it is said that the debentures are redeemed at premium. The difference between the redeemed price and the par value is regarded as a capital loss and this loss is written off till the redemption of the debentures.

The term redemption implies the discharge of an obligation arising out of the contractual obligations created through the debenture Trust Deed. In other words, discharge of the liability on account of debentures is called redemption of debenture. The redemption of debentures is made by the company in accordance with the terms and conditions of issue. Debentures may be redeemable at par, premium or discount, but in present scenario redemption of debentures at par and at premium is most popular. The redemption can be done out of profits or from the fresh issue of debentures or shares. 

Redemption of debentures may be done by the following methods 

(i) By paying after stipulated period 

(ii) By annual drawing 

(iii) By conversion into shares or new debentures 

(iv) By purchasing own debentures in the open market 

(v) At the option of the company

Discount on Issue of Debentures is regarded as a capital loss. As per the Revised Schedule VI of the Companies Act, 

Discount on Issue of Debentures is shown in the Notes to Accounts of Other Non-Current Assets. The final balance is shown on the Assets side of the Company’s Balance Sheet under the main head of Non-Current Assets.

When a company does not maintain any record of the debenture holders and the debenture is transferable mere by delivery, then the type of the debenture held by the holders is termed as Bearer Debenture. Interests on such debentures are paid to the persons who produce the interest coupons that are attached with these debentures in a specified bank.

The term collateral security means additional or secondary security in addition to the primary security. Sometimes, when a company takes loan from a financial institution, then besides the primary security, the company may issue debenture for additional security (as collateral security). The lender who receives debenture as collateral security is not entitled for interest on these debentures.

Collateral security is given in addition to the primary security to the loan provider. In case when a company takes some loan it may issue debentures for additional security besides the primary security to that particular bank or financial institution. Here it is to be remember that issue of debenture in ordinary course is different from issue of debenture as collateral security, in ordinary course debenture holders are entitled to get interest at an specified coupon rate where as in case of debenture issued as collateral security the holder of these debenture is not entitled to any such interest. But in case of any default in payment of principle or interest of loan it may recover its amount from the issue of such debenture in the secondary market. Here it should be remembered that first of all the primary security will be sold after that debenture as collateral security will be used.

The five gifts were for young man. 

The number of debentures issued to vendor is (a) 30,000

A Collateral Security is a Subsidiary Security.

True

Loss on issue of debentures account is a revenue loss.

False

Debentures cannot be issued at a premium. False

(a) They are to be immediately converted

Premium on redemption of debentures account is shown under the ‘Securities Premium’ in the Balance Sheet. 

False

Debentures cannot be converted into shares. 

False

Convertible Debentures are those debentures that can be converted into equity shares after a specified period of time.

When the debentures are redeemed at a price more than its face value or the par value, then it is said that the debentures are redeemed at premium. The difference between the redeemed price and the par value is regarded as a capital loss and this loss is written off till the redemption of the debentures. The Premium on Redemption of Debenture is shown in the Notes to Accounts under the sub-head of ‘Other Long-term Liabilities’. The final balance is shown under the main head of ‘Non-Current Liabilities’ on the Equity and Liabilities side of the Company’s Balance Sheet.

Debentures which are secured against asset/s of a company known as Mortgaged Debenture. Mortgage Debentures are of two types first fixed charge mortgage debenture and second floating charge mortgage debentures. When debentures are secured against a particular asset, then they are called fixed charge whereas, if the debentures are secured against all the assets of a company, then it is called floating charge. Mortgage debentures can only be sold by the holder when company fails to pay its loan or interest there on.

When the debentures are redeemed at a price more than its face value or the par value, then it is said that the debentures are redeemed at premium. The difference between the redeemed price and the par value is regarded as a capital loss and this loss is written off till the redemption of the debentures. The Premium on Redemption of Debenture is shown on the Liabilities side of the Balance Sheet under the head of “Current Liabilities and Provisions” debentures are redeemed.

Nature: A share is a part of the capital of the company and a debenture is a part of loan of the company. 

Dividend or Interest :Dividend on shares is paid only when there are profits in the company on the other hand debenture interest has to be paid, it the company does not have profit or even suffer a loss. 

Ownership Equity share holders are the owners of the company on the other hand debenture holders are the creditors of the company.

Mortgaged Debentures are those debentures that are secured against assets of a company.These are also known as secured debentures. If the debentures are secured against a particular asset, then it is called fixed charge v here as, if the debentures are secured against all the assets of a company, then it is called floating charge. In case the company fails to pay back the principal amount of debenture or fails to meet its interest obligations on the due date, then the debenture holders have the right to sell the mortgage asset in order to realise their amount due to the company.

Debenture is said to have been issued at discount where an applicant is required to pay a total sum less than the face value of the debenture. The excess of the face value over the issue price is regarded as the discount. When debentures are issued at a discount, cash account is debited with net sum received, the discount on debentures account is debited with the amount of discount allowed and the debentures account is credited with the full nominal value of the debentures. Here it is worth mentioning that there is no legal restriction on the companies for issuing debentures at discount. Maximum limit for discount on debentures is also not prescribed by the Companies Act. However, this Act requires that the amount of discount must be shown on the assets side of the Balance Sheet till written off under the head “Miscellaneous Expenditure.”

When debentures are redeemed out of current resources, the working capital of the company are reduced to that extent, and therefore, it is called redemption out of capital.

In other words when debentures are redeemed out of capital and no profits are utilised for redemption, then such redemption is termed as redemption out of capital.

A company cannot redeem its debentures purely out of capital. At least 50% of debentures issued must be redeemed out of profits by creating a ‘Debenture Redemption Reserve’ and the balance of debentures issued may be redeemed out of profits or out of capital.

According to the Companies Act, 1956 when debentures are to be redeemed an adequate amount of profits is required to be transferred to ‘Debenture Redemption Reserve’ every year before the redemption begins. It is to be noted that the Companies Act, 1956 does not spell out at to what is the adequate amount.

For this one can refer to SEBI Guidelines which stipulates that an amount equal to 50% of the debentures issue should be transferred to ‘Debenture Redemption Reserve’ before the redemption begins.

There are exceptions in the following cases 

(i) Infrastructure companies (i.e., those companies that are engaged in the business of developing, maintaining and operating infrastructure facilities) 

(ii) A company that issues debentures with a maturity up to 18 months. 

(iii) In case of Convertible debentures and convertible portion of partly convertible debentures

When the debentures are issued at a price below its par value or face value, then it is said that the debentures are issued at discount. The difference between the issue price and the face , value of the debenture, is regarded as a capital loss.

As we know that Discount on Issue of debentures is a capital loss and it will be written off out of the profit of coming years, Therefore, it is shown on the Assets side of the Balance Sheet under the heading of “Miscellaneous Expenditures” until it is written off.

When debentures are redeemed out of capital and no profits are utilised for redemption, then such redemption is termed as redemption out of capital. In such a situation, no profits are transferred to the Debenture Redemption Reserve.

On behalf of the story the narrator delivers an important lesson to the readers to avoid from the materials and glamour of the world in order to live a long and peaceful life in this mortal world. He says that the expectation of storing materials and gain name and fame in the society brings unnecessary troubles in the life of human being. He makes others his enemies and rivals.

The narrator says that Love, Fame, Wealth and Pleasures never remain permanently in the life but they remain for short time, after then becomes the cause of agonies such as the youth who chooses the gifts of the fairy one by one according to his own choice Pleasure, Love, Fame and Wealth but they prove troublesome for him and at last his life becomes the cause of humiliation and so the man ought to remember his death and never desire to store the useless objects in his life.

कहानी के माध्यम से लेखक पाठकों को महत्त्वपूर्ण शिक्षा प्रदान करता है कि इस नश्वर संसार में लम्बा। और शान्त जीवन जीने के लिए संसार के आकर्षण व भौतिक वस्तुओं अथवा सुखों को त्याग देना चाहिए। वह कहता है कि भौतिक वस्तुओं का संग्रह करने की कल्पना तथा समाज में नाम व शोहरत कमाने की चाहत मानव जीवन में अनावश्यक परेशानियाँ पैदा करती है। वह इस तरह अन्य लोगों को अपना शत्रु तथा प्रतिद्वंद्वी बना लेता है। लेखक कहता है कि प्रेम, प्रसिद्धि, धन तथा खुशियाँ कभी भी स्थायी नहीं रहती हैं। ये केवल अल्प काल के लिए रहती हैं।

तत्पश्चात् दु:खों का कारण बन जाती हैं। जैसे कि युवा व्यक्ति जो कि परी के उपहारों का चुनाव करता है अपनी पसंद के अनुसार वह एक-एक करके आमोद-प्रमोद, प्रेम, प्रसिद्धि तथा धनसम्पत्ति का चुनाव करता है लेकिन यह दुःखद प्रकट होते हैं तथा अन्त में उसका जीवन बेइज्जती का कारण बन जाता है तथा बर्बाद हो जाता है। इसलिए मनुष्य को सदैव अपनी मृत्यु को याद रखना चाहिए तथा अनावश्यक भौतिक वस्तुओं के संग्रह के बारे में अपने जीवन में कभी इच्छा नहीं रखनी चाहिए।

The narrator curses all the gifts of the world because he says that the gifts bring mockeries and troubles. In fact these are the sources of pain, grief and shame as well as become the cause of poverty. It appears in the form of lendings which appears pleasant in the beginning but at last it appears as a debt or loan and the man has to repay of the gifts in the form of unnecessary agonies which appear as the interest of the loan so that these fancy gifts become the cause of trouble in the life of human being.

लेखक संसार के सभी उपहारों को श्राप देता है क्योंकि वह कहता है कि ये उपहार मानव जीवन में उपहास व परेशानियाँ लाते हैं। वास्तव में ये दर्द, दुःख, शर्म तथा गरीबी के साधन हैं। ये एक प्रकार के ऋण के रूप में प्रकट होती हैं जो शुरू में खुशनुमा प्रतीत होती है लेकिन अन्त में ये एक कर्ज के रूप में प्रकट होती हैं तथा मानव को इन उपहारों का पुनः भुगतान करना पड़ता है तथा अनावश्यक परेशानियाँ उभर कर आती हैं उस ऋण के त्याग के रूप में। अतः ये आकर्षक पुरस्कार मानव के जीवन में परेशानी का कारण बन जाते हैं।

The man demanded death at last because he had chosen all the gifts of the fairy one by one but none of them proved useful in life and failed to bring complete peace and perfect satisfaction in his life. The Pleasure, Love, Wealth and Fame proved unworthy because these are not permanent. They bring unnecessary troubles in his life; So he realises all these gifts unworthy to be chosen besides Death because it is certain and it brings Love and Fame and regard of others.

आदमी अन्त में मृत्यु की माँग करता है क्योंकि वह परी के द्वारा लाई गई प्रत्येक उपहार को एक के बाद एक चुन चुका था लेकिन उनमें से कोई भी जीवन में उपयोगी साबित नहीं हुई तथा उसके जीवन में पूर्ण खुशी तथा संतुष्टि लाने में असमर्थ रही। खुशी, प्रेम, सम्पत्ति तथा शोहरत अयोग्य साबित हुईं क्योंकि ये सभी स्थाई नहीं हैं तथा जीवन में अनावश्यक परेशानियों को जन्म देती हैं इसलिए वह इन सभी उपहारों को अयोग्य सिद्ध करता है और उन्हें मौत के अलावा चुनने योग्य नहीं मानता है क्योंकि मृत्यु निश्चित है तथा अपने साथ दूसरों का प्रेम, सम्मान एवं प्रसिद्धि लाती है।

According to the narrator “Wealth” is in the form of power because the man can purchase anything of the world with money and he can make available all the luxuries of the world. Every person of the world becomes his friend and obeys his commands and kneels down before him. Every person talks about the wealthy person. In this way the Riches have been considered in the form of power in the life of human being.

लेखक के अनुसार सम्पत्ति ही शक्ति का रूप है क्योंकि मनुष्य संसार की सभी वस्तुएँ धन से खरीद सकता है तथा वह संसार की सारी विलासिताएँ प्राप्त कर सकता है। संसार का प्रत्येक व्यक्ति उसका मित्र बन जाता है तथा उसके आदेशों का पालन करता है तथा उसके सामने घुटनों के बल झुक जाता है। सब धनवान व्यक्ति के बारे में बातें करते हैं। इस तरह धन को मानव जीवन में शक्ति का रूप समझा जाता है।

The Fame also proved troublesome for the man because his name and Fame which was repeated on every tongue faded after short while and it would become the cause of envy. Every person who was in his favour began to criticise him and it would bring humiliation and notoriety for him and at last he got pity which was the death of popularity.

प्रसिद्धि भी आदमी के लिए दु:खद सिद्ध हुई क्योंकि उसका नाम व शोहरत जो प्रत्येक आदमी की जुबान पर थी थोड़े दिनों बाद फीकी पड़ गई तथा यह ईर्ष्या का कारण बन गई । प्रत्येक व्यक्ति जो उसके पक्ष में था उसकी आलोचना करने लगा तथा यह उसके लिए बदनामी व बेइज्जती का कारण बन गया और अंत में उसे दया मिली जो कि शोहरत की मृत्यु के समान थी।

When the debentures are issued at a price below its par value or face value, then it is said that the debentures are issued at discount. The difference between the issue price and the face value of the debenture is regarded as a capital loss. As per the Revised Schedule VI of the Companies Act, Discount on Issue of Debentures is sown in the Notes to Accounts of Other Non-Current Assets. The final balance is shown on the Assets side of the Company’s Balance Sheet under the main head of Non-Current Assets.

The following are the two methods of writing-off discount on issue of debentures, when debentures are redeemable in installments.

Fixed Installment Method/Equal Installment Method: Under this method, the total amount of discount (loss) is written off in equal installments over the life of the debenture. It is used when debentures are redeemable in lump sum after a specified period of time. The formula for calculating amount of discount written off every year is given by

Fluctuating Installment Method/Variable Installment Method/Propon Method: This method is used when the debentures are redeemed in installments. The discount on issue of debentures is written off in proportion’to the debentures outstanding at the end of each year.

According to the Company Act, if a company is authorised by its Article of Association, only then it may purchase its own debentures from the open market.

The different terms for the issue of debentures with reference to their redemption can be the combinations of at par, at premium and at discount. Normally, the debentures are not redeemable at-discount. The permutation and the combination of the various terms of issue and redemption of debentures give rise to following six situations:

1. Issue at Par, Redeemable at Par. 

2. Issue at Premium, Redeemable at Par. 

3. Issue at Discount, Redeemable at Par. 

4. Issue at Par, Redeemable at Premium. 

5. Issue at Premium, Redeemable at Premium. 

6. Issue at Discount Redeemable at Premium.

Issue at Par and Redeemable at Par: When the debentures are issued and are redeemed at their face value, then the following Journal entry is passed: 

Bank A/c Dr (with the amount receive

To Debenture Application A/c (with the face value) –

(Debenture Application money received

Debenture Application A/c Dr

To Debenture A/c

(Application money transferred to Debenture Account)

Issue at Premium and Redeemable at Par: When the debentures are issued at premium and are redeemable at par, then the following Journal entry is passed. As premium is again for a company so it is credited in the Journal entry:

Bank A/c Dr

To DebenJ ire Application A/c

(Debenture Application money received)

Debenture Application A/c Dr

To Debenture A/c To Securities Premium A/c

(Debentures issued at premium and redeemable at par)

Issue at Discount and Redeemable at Par: When the debentures are issued at discount and are redeemable at par, then the following Journal entry is passed. As discount is a loss for a company so it is debited in the Journal entry.

Bank A/e Dr

To Debenture Application A/c

(Debenture Application money received)

Debenture Application A/c Dr

Discount on Issue of Debenture A/c Dr To Debenture A/c

(Debentures issued at discount and redeemable at par)

Issue at Par and Redeemable at Premium: When debentures are issued at par and redeemable at premium, then the following Journal entry is passed. In such case, the company did not suffer any loss at the time of issue but there will be loss at the time of redemption.

Bank A/c Dr

To Debenture Application A/c 

(Debenture Application money received)

Debenture Application A/c Dr 

Loss on Issue of Debenture A/c Dr 

To Debenture A/c 

To Premium on Redemption of Debenture A/c 

(Debentures issued at par and redeemable at premium)

Issued at Premium and Redemption at Premium: When the debentures are issued and redeemable at premium, then the following Journal entry is passed. 

Bank A/c Dr 

To Debenture Application A/c 

(Debenture Application money received) 

Debenture Application A/c Dr 

Loss on Issue of Debenture A/c Dr 

To Debenture A/c 

To Securities Premium A/c 

To Premium on Redemption of Debenture A/c 

(Debentures issued at premium and redeemable at premium)

Issue of Discount and Redemption at Premium: When the debentures are issued at . discount and redeemable at premium, then the following Journal entry is passed:

Bank A/c Dr 

To Debenture Application A/c 

(Debenture Application money received) 

Debenture Application A/c Dr 

Loss on Issue of Debenture A/c Dr 

To Debenture A/c 

To Premium on Redemption of Debenture A/c 

(Debentures issued at discount and redeemable at premium)

Debentures can be redeemed out of capital and out of profits. The following are the difference between these two methods. Redemption of Debentures Out of Capital: This is the situation where debentures are redeemed out of capital and no profits are utilised for redemption of the debentures, such redemption is termed as redemption out of capital. In this situation, no profits are required to be transferred to the Debenture Redemption Reserve (DRR). Here it is to be remembered that no company can redeem its debenture purely out of capital because as per the guideline laid down by Securities and Exchange Board of India (SEBI) and the Section 117C of Company Act of 1956, before starting any redemption process a company is required to create a DRR equal to 50% of the debentures issued). Therefore, it is not possible to redeem debentures purely out of capital, as it reduces the value of assets. There are exceptions in the following case 

(i) Infrastructure companies (i.e., those companies that are engaged in the business of developing, maintaining and operating infrastructure facilities) 

(ii) A Company that issues debentures with a maturity up to 18 months. 

(iii) In case of convertible debentures and convertible portion of partly convertible debentures. Redemption of Debenture Out of Profits:When debentures are redeemed out of profit then no capital is utilised for redemption. Before redeeming the debentures profits are transferred to DRR from Profit and Loss Appropriation Account. The creation of DRR is mandatory as per the guidelines laid down by Securities and Exchange Board of India (SEBI). 

SEBI mandates transferring amount equal to 50% of debentures issued to DRR before redeeming debentures. As transfer of amount (profits) to the DRR from Profit and Loss Appropriation Account reduces the amount of profit available for distribution of dividend, so this redemption process is known as redemption out of profit. DRR is shown under the head of Reserves and Surpluses on the Liabilities side of the Balance Sheet. 

DRR account is closed by transferring it to General Reserve only when all the debentures are redeemed.

Correct answer is (c) 4 and 5