Accounting for Debentures — Chapter Summary
Gujarat Board · Class 12 · Elements of Accounts
Summary of Accounting for Debentures for Gujarat Board Class 12 Elements of Accounts. Part of the Gujarat Board Class 12 Elements of Accounts syllabus.
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Overview
Debentures are one of the most important instruments of long-term borrowing used by companies to raise funds from the public. When a company requires funds beyond its share capital, it can issue debentures — a formal document or certificate that acknowledges the company's debt to the investor. Unlik
Key Concepts
A debenture is a document issued
A debenture is a document issued under the common seal of a company that acknowledges its debt to the investor. It is a certificate of creditorship th
Debentures are classified on four bases
Debentures are classified on four bases: (1) On the basis of Security — Secured/Mortgage Debentures (with fixed or floating charge on assets) and Unse
When debentures are issued at their
When debentures are issued at their face value (e.g., a ₹100 debenture issued at ₹100), they are said to be issued at par. Accounting entries: (i) Ban
When debentures are issued at more
When debentures are issued at more than face value (e.g., ₹100 debenture issued at ₹130), the excess ₹30 is the premium. This premium is credited to '
When debentures are issued at less
When debentures are issued at less than face value (e.g., ₹100 debenture issued at ₹80), the shortfall of ₹20 is the discount. This discount is debite
Learning Objectives
- Understand the meaning and nature of debentures as instruments of borrowing
- Identify and distinguish between various types of debentures
- Learn the procedure for issue of debentures to the public
- Record journal entries for issue of debentures at par, premium, and discount
- Account for debentures issued for consideration other than cash
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Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.
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