Issue of Debentures at Discount

When debentures are issued at less than their nominal value they are said to be issued at discount. For example, debenture of Rs 100 each is issued at Rs 90 per debenture. Companies Act, 1956 has not laid down any conditions for the issue of debentures at a discount as have been laid down in case of issue of shares at discount. However, there should be provision for issue of such debentures in the Articles of Association of the Company.

Journal entry for issue of debentures at discount (at the time of allotment) Debentures Allotment A/c Dr
Discount on issue of debentures A/c Dr

To Debentures A/c

(Allotment money due. The amount of discount is @ Rs .... per debenture)

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