Difference between premium on Issue of Debentures and Premium on Redemption of Debentures (Class 12)
Looking for the difference between premium on issue of debentures and premium on redemption of debentures as per the syllabus of class 12 CBSE, ISC, and state Board.
This topic is concerned with accounting for debentures (issue of debentures) chatper of accountancy class 12.
I have explained this topic in detail.
Distinction between premium on Issue of Debentures and Premium on Redemption of Debentures (Class 12)
Following are the differences
| Basis | Premium on Issue of Debentures | Premium on Redemption of Debentures |
| Capital Profit/Loss | It is a capital profit and is used for the purposes specified in Section 52(2) of the companies Act, 2013 | It is a capital loss |
| Nature | It is a reserve | It is a liability |
| Outflow of Cash | It does not involve outflow of cash | It is paid when the debentures are redeemed |
| How shown in Balance Sheet | The Balance is shown in the Equity and Liabilities part of the Balance Sheet under main head Shareholders funds and sub-head reserves and surplus | It is shown in the Equity and Liabilities part of the Balance Sheet under the main head ‘Non-Current Liabilities, and sub-head ‘Other Long-term Liabilities’. |
