Download CBSE Class 12 Accountancy Redemption Of Debenture Notes in PDF format. All Revision notes for Class 12 Accountancy have been designed as per the latest syllabus and updated chapters given in your textbook for Accountancy in Class 12. Our teachers have designed these concept notes for the benefit of Class 12 students. You should use these chapter wise notes for revision on daily basis. These study notes can also be used for learning each chapter and its important and difficult topics or revision just before your exams to help you get better scores in upcoming examinations, You can also use Printable notes for Class 12 Accountancy for faster revision of difficult topics and get higher rank. After reading these notes also refer to MCQ questions for Class 12 Accountancy given on studiestoday
Revision Notes for Class 12 Accountancy Part 2 Chapter 2 Issue and Redemption of Debentures
Class 12 Accountancy students should refer to the following concepts and notes for Part 2 Chapter 2 Issue and Redemption of Debentures in Class 12. These exam notes for Class 12 Accountancy will be very useful for upcoming class tests and examinations and help you to score good marks
Part 2 Chapter 2 Issue and Redemption of Debentures Notes Class 12 Accountancy
CHAPTER 9
Redemption of Debenture
Meaning : Redemption of debentures means repayment of the due amount of debentures to the debenture holders. It may be at par or at premium.
Time of redemption : (a) At maturity : when repayment is made at the date of maturity of debentures which is determined at the time of issue of debentures.
(b) Before maturity : If articles of association and terms of issue mentioned in prospectus allows, then a company can redeem its debentures before maturity date. Redemption methods : (1) Redemption is Lumpsum :When redemption is made at the expiry of a specific period, as per the terms of issue.
(2) Redemtion by draw of lots :In this method a certain proportion of debentures are redeem each year, the debenture for which repayment is to be made is selected by draw.
(3) Redemtion by purchase in open market :if articles of association of a company authorize, it may purchase its own debentures from open market i.e. stock exchange. Advantage of this method :
1. When market price of own debentures is low than the redeemable value.
2. Decrease the amount of interest payable to outsiders.
3. if term of issue is provided that debentures are to be redeemed at premium then such premium can be decrease Sometimes company can purchase the debentures at more than the redeemable value
due to the following reasons :
1. To maintain the solvency ratio.
2. To utlize the surplus money or funds which are lying idle with the company.
3. When rate of interest on debentures is more than the current market rate of interest on debentures in the industry.
4. Redemption by conversion : As per the terms of issue, convertible debentures may be covert into shares or new debentures at the option of debenture holders. This option of conversion is given to the debentureholder within specific period. In this case no need to transfer profit to Debenture Redemption Reserve Account.
Sources of Redemption of debentures.
1. Proceeds from fresh issue of share capital or debenture holders.
2. From accumulated profits.
3. Proceeds from sale of fixed assets.
4. A company may purchases its own debentures out of its surplus funds.
Two terms which are used in the redemption of debentures :
1. Redemption out of capital : when a company not used its reserve or accumulated profit for redemption of its debentures. It is called redemption out of capital. So company using this method are not transfer it profit to DRR A/c. But as per SEBI guidelines it is necessary for a company to transfer 50% amount of nominal value of debentures to be redeemed in DRR A/c before redemption of debentures commence.
2. Redemption out of profit : Redemption out of profit means that adequate amount of profits are transferred to DRR A/c from P&L Appropriation A/c before the redemption of debenture commences. This reduce the amount available for dividends to shareholders.
Debenture Redemption Reserve : Debenture redemption reserve is a reserve representing retentions out of profit made for the purpose of redemption of debentures. Amount of DRR to be created : Section 117 (c) of the Indian Companies Act 1956 requires that, an adequate amount of profit should be transferred to DRR before redemption commences. However the adequate amount is not specified by the companies Act.
SEBI has issued guidlines for the redemption of debentures whereby :
1. An amount equivalent to 50% of the amount of debentures issue must be transferred to DRR before redemption of debentures commences. This provision is applicable for nonconvertible debentures or nonconvertible part of party convertible debentures. After all the debentures are redeemed, this account is closed by transferring to general reserve account.
Exception to the creation of DRR as per SEBI guidlines :
1. All infrastructure companies, wholly engaged in the business related to development maintenance and operation of infrastructure facilities.
2. A company issuing debentures maturity period of not more than 18 months.
3. Debentures issued by Banking Companies.
4. Companies issuing privately placed debentures.
The above types of companies are exempted by SEBI from creating DRR. However the above types of companies can create DRR(at it option) for the redemption of debentures.
(B) Redemption At Premium : Illustration 2. Z Ltd. Redeemed its 1,00,000 10% Debentures of Rs.10 each at 5% premium on 31st March, 2011.
Illust. 3 : Rajesh Export Ltd. has 2,000, 9% Debentures of Rs.100 each due on redemption on 31st March 2011. Debentures redemption reserve has a balance of Rs.30,000 on that date. Record the necessary journal entries at the time of redemption of debentures
Illust. 4 : Rahul Ltd. has 50,000, 9% Debentures of Rs.50 each due on redemption on
31st March 2011. Debentures redemption reserve has a balance of Rs.15,00,000 on that date. Record the necessary journal entries at the time of redemption of debentures.
Note : In this case DRR is Already more than 50% of nominal value of debentures, then it is created upto the 100% of the nominal value of debenture
Illust.5 : Saket Ltd.(an infrastructure co.) has outstanding 10,000, 9% Debentues of Rs.50 each due on redemption on 31st March, 2011. Record the necessary journal entries at the time of redemption of debentures.
(Note : The infrastructure Companies are exempted from creating DRR as per SEBI guidlines. However these companies may create DRR at its option.)
Redemption Method : 2 Draw of lots
Illustration 6 : S Ltd. redeemed its Rs.10,000, 8% Debentures out of capital by drawing a Lot on 30 Nov.2011 Journalise.
Please click the link below to download pdf file for CBSE Class 12 Redemption of Debenture.
CBSE Class 12 Accountancy Important Formulas |
CBSE Class 12 Accountancy Accounting For Not For Profit Organisations Notes Set A |
CBSE Class 12 Accountancy Accounting For Not For Profit Organisations Notes Set B |
CBSE Class 12 Accountancy Accounting For Partnership Firms Admission Of A Partner Notes |
CBSE Class 12 Accountancy Accounting For Partnership Firms Fundamentals Notes |
CBSE Class 12 Accountancy Reconstitution Of Partnership Notes |
CBSE Class 12 Accountancy Retirement Or Death Of A Partner Notes |
CBSE Class 12 Accountancy Dissolution Of A Partnership Firm Notes |
CBSE Class 12 Accountancy Accounting For Debentures Notes |
CBSE Class 12 Accountancy Redemption Of Debenture Notes |
CBSE Class 12 Accountancy Financial Statement Of Companies Notes |
CBSE Class 12 Accountancy Analysis Of Financial Statements Notes |
CBSE Class 12 Accountancy Partnership Common Size And Comparative Statements Notes |
CBSE Class 12 Accountancy Part 2 Chapter 2 Issue and Redemption of Debentures Notes
We hope you liked the above notes for topic Part 2 Chapter 2 Issue and Redemption of Debentures which has been designed as per the latest syllabus for Class 12 Accountancy released by CBSE. Students of Class 12 should download and practice the above notes for Class 12 Accountancy regularly. All revision notes have been designed for Accountancy by referring to the most important topics which the students should learn to get better marks in examinations. Our team of expert teachers have referred to the NCERT book for Class 12 Accountancy to design the Accountancy Class 12 notes. After reading the notes which have been developed as per the latest books also refer to the NCERT solutions for Class 12 Accountancy provided by our teachers. We have also provided a lot of MCQ questions for Class 12 Accountancy in the notes so that you can learn the concepts and also solve questions relating to the topics. We have also provided a lot of Worksheets for Class 12 Accountancy which you can use to further make yourself stronger in Accountancy.
You can download notes for Class 12 Accountancy Part 2 Chapter 2 Issue and Redemption of Debentures for latest academic session from StudiesToday.com
Yes, the notes issued for Class 12 Accountancy Part 2 Chapter 2 Issue and Redemption of Debentures have been made available here for latest CBSE session
There is no charge for the notes for CBSE Class 12 Accountancy Part 2 Chapter 2 Issue and Redemption of Debentures, you can download everything free of charge
www.studiestoday.com is the best website from which you can download latest notes for Part 2 Chapter 2 Issue and Redemption of Debentures Accountancy Class 12
Come to StudiesToday.com to get best quality topic wise notes for Class 12 Accountancy Part 2 Chapter 2 Issue and Redemption of Debentures