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Joint Stock Company Accounts : Redemption of Debenture — Syllabus

ICSE · Class 12 · Accountancy

What Joint Stock Company Accounts : Redemption of Debenture covers in ICSE Class 12 Accountancy: 4 topics, for the 2026-27 session.

44 questions38 flashcards4 formulas & key relations5 concepts

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4 Topics · ICSE Class 12 Accountancy · 2026-27

Topics in Joint Stock Company Accounts : Redemption of Debenture

1

1. Meaning, methods, and sources of redemption

  • Redemption of debentures means repayment of debenture amount to the debentureholders.
  • The terms and conditions of issue and redemption of debentures are specified in the debenture certificate.
  • Main methods of redemption are: redemption in a lump sum, redemption in annual instalments by draw of lots, and redemption by purchase in the open market.
2

2. Debenture Redemption Reserve and legal rules

  • Debenture Redemption Reserve is a reserve retained out of profits available for dividend for redeeming debentures before redemption begins.
  • Debenture Redemption Reserve appears in the Balance Sheet under Shareholder’s Funds and sub-head Reserves and Surplus.
  • A company must create Debenture Redemption Reserve equivalent to at least 25% of the debentures issued before redemption commences.
3

3. Redemption through fresh issue or out of profits/capital

  • A company may redeem debentures from the proceeds of fresh issue of shares or debentures.
  • Redemption from fresh issue does not affect the financial position of the company in the same way as using current resources.
  • Redemption out of capital uses current resources and can weaken working capital.
4

4. Accounting entries for issue and redemption of debentures

  • At issue, Bank A/c is debited and Debenture Application and Allotment A/c is credited when money is received.
  • When debentures are issued at a discount, Discount on Issue of Debentures A/c is debited.
  • When debentures are issued at a premium, Securities Premium Reserve A/c is credited.

Key Concepts

Central concept: Redemption of Debentures

Meaning of redemptionMethods of redemptionSources of finance for redemptionDebenture Redemption ReserveDebenture Redemption InvestmentOpen market purchase of own debenturesCapital profit and capital lossIssue-related debenture accounts

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Frequently Asked Questions

What are the important topics in Joint Stock Company Accounts : Redemption of Debenture for ICSE Class 12 Accountancy?
Key topics in Joint Stock Company Accounts : Redemption of Debenture include Meaning, methods, and sources of redemption, Debenture Redemption Reserve and legal rules, Redemption through fresh issue or out of profits/capital, Accounting entries for issue and redemption of debentures. Study these first, then practise questions on each for the ICSE Class 12 board exam.
How should I revise Joint Stock Company Accounts : Redemption of Debenture for the ICSE Class 12 board exam?
Learn the core ideas first, then work through the 44 practice questions on Joint Stock Company Accounts : Redemption of Debenture. Revise definitions regularly and use flashcards for quick recall before the exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

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