Issue of Debentures for consideration other than cash

When a company purchases some assets and issues debentures as a payment for the purchase, to the vendors it is known as issue of debentures for consideration other than cash. Debentures can be issued to vendors at par, at premium and at discount

Accounting Treatment :

1. Purchase of Assets

Sundry Assets A/c Dr

(Individually)

To Vendors A/c

(Purchase of assets)

2. Allotment of debentures

(i) At par

Vendors' A/c Dr

To Debentures A/c

(issue of debentures at par to vendors) (ii) At discount
Vendors' A/c Dr Debentures Discount A/c Dr To Debentures A/c
(Issue of debentures to vendors at a discount of
Rs ... per debenture)


(iii) At premium

Vendors’ A/c Dr

To Debentures A/c

To Securities Premium A/c

(issue of debentures to vendors at a premium of Rs .... per debenture)