ISSUE OF DEBENTURES AT PREMIUM AND AT DISCOUNT
Debentures are said to be issued at premium when these are issued at a value which is more than their nominal value. For example, a debenture of
Rs 100 is issued at Rs 110. This excess amount of Rs 10 is the amount of premium. The premium on the issue of debentures is credited to the Securities Premium A/c as per section 78 of the Companies Act, 1956.
Journal entry will be as follows :
Debentures Allotment A/c Dr
To Debentures Account
To Securities Premium A/c
(Amount due on allotment alongwith premium of Rs ....)
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