MCQs of Redemption of Debentures with answers class 12
Looking for important MCQs of issue of debentures chapter with answers of class 12 Accountancy CUET, CBSE, ISC and other State Board.
Multiple Choice Questions of Redemptoin of Debentues chapter with Answers of Class 12 Accountnacy
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(1) The provisions of the Companies Act, 2013 in respect of redemption of debentures are to protect the interest of:
(a) Debenture holders
(b) Creditors
(c) Shareholders
(d) Bankers
Ans – (a)
(2) If debentures of ₹ 10,00,000 are issued at par and redeemable at a premium of 10%, premium payable on redemption is debited to
(a) Debentures Suspense Account
(b) Premium on Redemption of Debentures Account
(c) Loss on Issue of Debentures Account
(d) Both (a) and (c)
Ans – (c)
(3) Amount is set aside to Debentures Redemption Reserve (DRR) when
(a) Debentures are issued by a listed Company
(b) Debenture are issued by an unlisted NBFC
(c) Debentures are issued by an unlisted (Non-NBFC or HFC) company.
(d) Debentures are issued by a listed HFC company
Ans – c
(4) Which of the following can be used for transferring amount to Debentures Redemption Reserve (DRR)?
(a) Capital Reserve
(b) Securities Premium
(c) Surplus i.e., Balance in Statement of Profit & Loss
(d) Revaluation Reserve
Ans – c
(5) Uniball Ltd., a listed company, issued 5,000, 10% Debentures of ₹ 100 each. It will transfer to DRR at least
(a) ₹ 2,50,000
(b) ₹ 5,00,000
(c) ₹ 50,000
(d) Nil
Ans – d
(6) Neptune Ltd., an unlisted manufacturing company has to redeem its 3,000, 7% Debentures of ₹ 100 each on 30th September, 2022. As per the provisions of the Companies Act, 2013, on which date should the company invest in specified securities?
(a) On or before 30th September, 2021
(b) On or before 30th September, 2022
(c) On or before 30th April, 2021
(d) On or before 30th April, 2022
Ans – d
(7) Uniflow Pens Ltd., an unlisted (Non-NBFC or HFC) company, had issued 5,000, 10% Debentures of ₹ 100 each, 25% of the issued debentures redeemable every year starting from 31st March, 2024. It transferred the amount to DRR as required by law. The balance in DRR after redemption on 31st March, 2024 will be
(a) ₹ 50,000
(b) ₹ 40,000
(c) ₹ 37,500
(d) ₹ Nil
Ans – c
(8) Top Ramen Ltd., a listed company, is to redeem 1,000; 10% Debentures of ₹ 100 each redeemable at 10% premium. The company will have to invest in specified securities at least.
(a) ₹ 15,000
(b) ₹ 16,500
(c) ₹ 25,000
(d) ₹ 27,500
Ans – a
(9) 3 Aces Ltd., an unlisted company, is to redeem 2,000; 9% Debentures of ₹ 100 each on 31st December, 2024. The company should invest in specified securities on or before.
(a) 30th April, 2023
(b) 30th April, 2024
(c) 31st December, 2024
(d) 31st December, 2023
Ans – b
(10) Power Ltd., an unlisted (Non-NBFC or HFC) company, has to redeem 2,000, 8% Debentures of ₹ 100 each out of outstanding debentures of 10,000, 8% Debentures. It should transfer amount to DRR before redemption.
(a) ₹ 80,000
(b) ₹ 20,000
(c) ₹ 1,00,000
(d) Nil
Ans – c
(11) Best Barcode Ltd. is to redeem 10,000, 10% Debentures of ₹ 100 each in four equal annual instalments beginning from 30th June, 2023. It invested ₹ 37,500 in specified securities on 1st April, 2023. it
(a) will realise investment at the time of each redemption and reinvest.
(b) may or may not realise the investment at the time of each redemption.
(c) will realise the investment at the time of third redemption.
(d) will realise the investment at the time of last redemption.
Ans – d
As per SEBI Guidelines, in case of an unllisted company, an amount equal to Debenture Redemption Reserve before redemption begins.
(A) 25%
(B) 50%
(C) 10%
(D) 100%
Ans – C
According to the guidelines issued by Securities and Exchange Board of India (SEBI) what percentage of the amount of debentures must be transferred to ‘Debenture Redemption Reserve’ before the commencement of redemption of debentures, in case of convertible debentures?
(A) 25%
(B) 50%
(c) 100%
(D) Zero
Ans – d)
X Ltd. (an unlisted company) wants to redeem 5,000, 5% Debentures of ₹ 100 each at 5% premium. How much amount it must transfer to Debenture Redemption Reserve, if it has already a balance of ₹ 20,000 in Debenture Redemption Reserve Account?
(a) ₹ 1,05,000
(b) ₹ 30,000
(c) ₹ 2,30,000
(d) 4,80,000
Ans – b)
Where is ‘Debenture Redemption Reserve’ transferred after the redemption of all debentures?
(a) Capital Reserve Account
(b) General Reserve Account
(c) Statement of Profit and Loss
(d) Sinking Fund Account
Ans – b)
Profit on redemption of debentures is transferred to which account?
(a) Capital Reserve Account
(b) General Reserve Account
(c) Sinking Fund Account
(d) Statement of Profit and Loss
Ans – a)
Profit on cancellation of own debentures is transferred to:
(a) General Reserve
(b) Statement of Profit and Loss
(c) Capital Reserve
(d) Debentures Account
Ans – c)
Debentures can be redeemed:
(a) By annual drawings
(b) By purchase in the open market
(c) By Conversion
(d) By all of the above
Ans – d)
X Ltd. redeemed 6,000, 8% debentures at 105% by converting them into equity shares of ₹ 10 each at ₹ 12. State the number of equity shares issued.
(a) 60,000
(b) 52,500
(c) 63,000
(d) 63,000
Ans – b)
At the option of debentureholders, B Ltd. redeemed 3,000, 8% debentures of ₹ 100 each which were issued at a discount of 2% by converting them into shares of ₹ 10 each at a premium of ₹ 5 pre share. The number of Shares issued will be:
(a) 30,000
(b) 20,000
(c) 19,600
(d) 29,400
Ans – c)
Purchase of its own debentures by a company when these are not cancelled will be shown in the balance sheet:
(a) Under the Intangible Assets heading on the assets side
(b) Under the Non-Current Investments heading on assets side
(c) Under the Long term Borrowings heading on equity & liabilities side
(d) Under the Debentures heading on the equity & liabilities side
Ans – b)
From how much amount ‘Debenture Redemption Reserve’ will be created in case ₹ 8,00,000 debentures are redeemed by conversion?
(a) ₹ 8,00,000
(b) ₹ 4,00,000
(c) ₹ 2,00,000
(d) Nil
Ans – d)
Profit on cancellation of own debentures purchased by the Company in the Open Market will be transferred to:
(a) Statement of Profit & Loss
(b) Credit side of Sinking Fund
(c) Capital Reserve
(d) General Reserve
Ans – c)
Loss on sale of sinking fund investments will be debited to:
(a) Statement of Profit & Loss
(b) Sinking Fund Investment Account
(c) Sinking Fund Account
(d) General Reserve Account
Ans – c)
Profit on cancellation of own debentures is:
(a) Revenue Profit
(b) Capital Profit
(c) Operating Profit
(d) Trading Profit
Ans – b)
Interest on sinking fund investment will be credited to:
(a) Statement of Profit & Loss
(b) General Reserve Account
(c) Sinking Fund Investment Account
(d) Sinking Fund Account
Ans – d)
Balance of Sinking Fund Account always shows:
(a) Debit Balance
(b) Credit Balance
(c) Neither Debit Balance nor Credit balance
(d) Either Debit Balance or Credit Balance
Ans – b)
Balance of Sinking Fund Investment Account always shows:
(a) Debit Balance
(b) Credit Balance
(c) Neither Debit Balance nor Credit Balance
(d) Either Debit Balance or Credit Balance
Ans – a)
On 1st April, 2022 the Debentures Redemption Fund stood at ₹ 3,00,000 represented by ₹ 3,60,000, 5% Loan of the Government of India. On that date investments were sold at 86%. Profit/loss on sale of investments will be:
(a) Loss ₹ 9,600
(b) Profit ₹ 9,600
(c) Loss ₹ 42,000
(d) Loss ₹ 50,400
Ans – b)
On 1st April, 2022, Sinking Fund amounted to ₹ 4,50,000 invested in investments of face value of ₹ 5,00,000. Out of this, investments of face value of ₹ 1,50,000 were sold at 80%. Profit or loss on sale will be:
(a) Loss ₹ 30,000
(b) Profit ₹ 20,000
(c) Profit ₹ 30,000
(d) Loss ₹ 15,000
Ans – d)
On 1st April, 2022, Sinking Fund amounted to ₹ 2,00,000 invested in investments of face value of ₹ 1,80,000. Out of this, investments of face value of ₹ 1,35,000 were sold at 110%. Profit or loss on sale will be:
(a) Loss ₹ 6,500
(b) Profit ₹ 27,000
(c) Loss ₹ 1,500
(d) Profit ₹ 1,500
Ans – c)
At the option of debentureholders, a company redeemed 22,000, 10% debentures of ₹ 100 each, which were issued at 5% discount, by converting them into shares of ₹ 100 each at a premium of 10%. Number of shares to be issued will be:
(a) 20,000
(b) 18,000
(c) 15,000
(d) 19,000
Ans – d)
Wellness Co. Ltd. (an unlisted company) has issued 20,000, 9% Debentures of ₹ 100 each at a premium of 10% on 1st April, 2018 redeemable as follows:
31st March, 2021 – 10,000 debentures
31st March, 2022 – 4,000 debentures
31st March, 2023 – balance debentures
It transferred the required amount to Debentures Redemption Reserve on due date. How much amount will be transferred to General Reserve on 31st March, 2021?
(a) ₹ 2,50,000
(b) ₹ 1,00,000
(c) ₹ 2,00,000
(d) ₹ 5,00,000
Ans – b)
No debenture redemption reserve is required for debentures issued by:
(a) Manufacturing Companies
(b) Infrastructure Companies
(c) Banking Companies
(d) Trading Companies
Ans – c)
Premier Ltd. issued 2,000, 9% Debentures of ₹ 100 each at par, redeemable after five years at a premium of 10%. The minimum amount invested in Debenture Redemption Investments will be:
(a) ₹ 30,000
(b) ₹ 33,000
(c) ₹ 50,000
(d) ₹ 2,00,000
Ans – a)
A company issuing debentures with a maturity period of not more than 18 months, in that case the creation of Debenture Redemption Reserve will be:
(a) 10% of the amount of debentures outstanding
(b) 25% of the amount of debentures outstanding
(c) 50% of the amount of debentures outstanding
(d) None of the above
Ans – d)
Utsav Ltd. (an unlisted company) decided to redeem its 4,000, 9% Debentures of ₹ 100 each which were issued at a discount of 8%, and were redeemable at a premium of 10%. The amount transferred to Debenture Redemption Reserve will be:
(a) ₹ 40,800
(b) ₹ 44,000
(c) ₹ 1,00,000
(d) ₹ 40,000
Ans – d)
X Ltd. (an unlisted company) wants to redeem 5,000, 5% Debentures of ₹ 100 each at 5% premium. How much amount it must transfer to Debenture Redemption Reserve, if it has already a balance of ₹ 20,000 in Debenture Redemption Reserve Account?
(a) ₹ 1,05,000
(b) ₹ 30,000
(c) ₹ 2,30,000
(d) ₹ 4,80,000
Ans – b)
A Company issuing debentures with a maturity period of not more than __ need not create Debenture Redemption Reserve.
(a) 2 months
(b) 6 months
(c) 12 months
(d) 18 months
Ans – d)
Where is ‘Debenture Redemption Reserve’ transferred after the redemption of all debentures?
(a) Capital Reserve Account
(b) General Reserve Account
(c) Statement of Profit and Loss
(d) Sinking Fund Account
Ans – b)
Wellness Co. Ltd. (an unlisted company) has issued 20,000, 9% Debentures of ₹ 100 each at a premium of 10% on 1st April, 2018 redeemable as follows:
31st March, 2021 – 10,000 debentures
31st March, 2022 – 4,000 debentures
31st March, 2023 – balance debentures.
It transferred the required amount to Debentures Redemption Reserve on due date. How much amount will be transferred to General Reserve on 31st March, 2021
(a) ₹ 2,50,000
(b) ₹ 1,00,000
(c) ₹ 2,00,000
(d) ₹ 5,00,000
Ans – b)
No debenture redemption reserve is required for debentures issued by:
(a) Manufacturing Companies
(b) Infrastructure Companies
(c) Banking Companies
(d) Trading Companies
Ans – c)
Premier Ltd. issued 2,000, 9% Debentures of ₹ 100 each at par, redeemable after five years at a premium of 10%. The minimum amount invested in Debenture Redemption Investments will be:
(a) ₹ 30,000
(b) ₹ 33,000
(c) ₹ 50,000
(d) ₹ 2,00,000
Ans – a)
Premium payable on redemption of debentures is a/an
(a) Liability Account
(b) Asset Account
(c) Expense Account
(d) Income Account
Ans – a)
In case debentures of ₹ 10,000 are issued at par and are redeemable at a premium of 10%, the premium payable is debited to
(a) Debentures Suspense Account
(b) Premium on Redemption of Debentures Account
(c) Loss on Issue of Debentures Account
(d) Interest on Debentures Account
Ans – c)
Star Ltd., an unlisted (Non-NBFC or HFC) company, has outstanding 10,000, 9% Debentures of ₹ 100 each due for redemption at a premium of 5%. It has a balance of ₹ 50,000 on Debentures Redemption Reserve. Star Ltd. is further required to transfer to Debentures Redemption Reserve.
(a) ₹ 50,000
(b) ₹ 1,00,000
(c) ₹ 10,00,000
(d) ₹ 9,50,000
Ans – a)
Top Ramen Ltd., a listed company, is to redeem 1,000; 10% Debentures of ₹ 100 each redeemable at 10% premium on 31st March, 2021. The company will have to invest in specified securities amount not less than
(a) ₹ 15,000
(b) ₹ 16,500
(c) ₹ 25,000
(d) ₹ 27,500
Ans – a)
3 Aces Ltd., an unlisted (Non-NBFC or HFC) company, is to redeem 2,000; 9% Debentures of ₹ 100 each on 31st December, 2021. The company should invest in specified securities on or before.
(a) 30th April, 2020
(b) 30th April, 2021
(c) 31st December, 2020
(d) 31st December, 2021
Ans – b)
Best Barcode Private Ltd. is to redeem 10,000; 10% Debentures of ₹ 100 each on 30th June, 2020. The company should invest in specified securities on or before
(a) 30th April, 2019
(b) 30th April, 2018
(c) 30th June, 2019
(d) 30th April, 2020
Ans – d)
Global Savings bank Ltd. is to redeem 10,000; 10% Debentures of ₹ 100 each on 30th June, 2020. How much amount it should transfer to DRR?
(a) ₹ 2,50,000
(b) ₹ 1,00,000
(c) ₹ 5,00,000
(d) ₹ Nil
Ans – d)
IFCI Ltd., an Other Financial Institution, is to redeem 40,000, 10% Debentures of ₹ 100 each on 31st December, 2020. How much amount should it invest in specified securities?
(a) ₹ 6,00,000
(b) ₹ 10,00,000
(c) ₹ 5,00,000
(d) ₹ Nil
Ans – d)
Amount is set aside to Debentures Redemption Reserve (DRR) by
(a) All unlisted (Other than NBFC’s and HFCs) Companies.
(b) All companies except Banking Company.
(c) All companies except All India Financial Institutions regulated by RBI
(d) All companies except Banking Company and All India Financial Institutions regulated by RBI.
Ans – a)
Amount is not set aside to Debentures Redemption Reserve (DRR) if
(a) the debentures are not convertible
(b) the debentures are partly convertible
(c) the debentures are fully convertible
(d) the debentures are redeemable in cash
Ans – c)
After redemption of debentures in lump sum, balance in Debentures Redemption Reserve (DRR) Account is transferred to
(a) Capital Reserve
(b) Surplus, i.e., Balance in Statement of Profit and Loss
(c) General Reserve
(d) Capital Redemption Reserve
Ans – c)
If the debentures are redeemed in parts, Debentures Redemption Reserve is
(a) transferred to General Reserve proportionate to debentures redeemed
(b) transferred to Capital Reserve proportionate to debentures redeemed
(c) transferred to General Reserve after all debentures have been redeemed
(c) transferred to Capital Reserve after all debentures have been redeemed
Ans – a)
Anmol Retail Ltd., an unlisted company, is to redeem 50,000, 8% Debentures of ₹ 100 each at a premium of ₹ 10. Amount that should be set aside to Debentures Redemption Reserve (DRR) is
(a) ₹ 5,00,000
(b) ₹ 10,00,000
(c) ₹ 11,00,000
(d) Nil
Ans – a)
Rattan Ltd., a Listed Company, is to redeem 10,000, 8% Debentures of ₹ 100 each at a premium of ₹ 10 out of profit. Amount that should be set aside to Debentures Redemption Reserve (DRR) is
(a) ₹ 2,50,000
(b) ₹ 10,00,000
(c) ₹ 11,00,000
(d) Nil
Ans – d)
Anmol Finance Ltd., a Listed NBFC, is to redeem 10,000, 8% Debentures of ₹ 100 each at a premium of ₹ 10 out of profit. Amount that should be invested in Debentures Redemption Investment is
(a) ₹ 1,50,000
(b) ₹ 1,65,000
(c) ₹ 3,15,000
(d) Nil
Ans – a)
H & S Housing Finance Ltd., an unlisted company, has outstanding 10,000, 8% Debentures of ₹ 100 each redeemable at premium of ₹ 10 each. Out of these, 5,000 debentures are to be redeemed on 31st December, 2020. Debentures Redemption Reserve should be
(a) ₹ 1,37,500
(b) ₹ 1,25,000
(c) ₹ Nil
(d) ₹ 2,75,000
Ans – c)
G & S Ltd., an unlisted company, has outstanding 10,000, 8% Debentures of ₹ 100 each redeemable at premium of ₹ 10 each. Out of these, 5,000 debentures are to be redeemed on 31st December, 2020. As on the date of the redemption, Debentures Redemption Investment should be
(a) ₹ 75,000
(b) ₹ 82,500
(c) ₹ 1,50,000
(d) ₹ 1,65,000
Ans – a)
Arpit Financing Co. Ltd., a listed NBFC, is to redeem its debentures of nominal (face) value ₹ 2,50,000 each on 30th June, 2020; 30th September, 2020, 31st December, 2020 and 31st March, 2021. The amount that should be invested in Debenture Redemption Investment on or before 30th April, 2020 should be
(a) ₹ 37,500
(b) ₹ 1,50,000
(c) ₹ 2,50,000
(d) ₹ 10,00,000
Ans – b)
Anurag Ltd., a listed HFC, is to redeem its debentures of nominal (face) value of ₹ 2,50,000 each on 30th September, 2020, 31st December, 2020, 31st March, 2021 and 30th June, 2021. The amount to be invested in Debentures Redemption Investment on or before 30th April, 2020 should be
(a) ₹ 37,500
(b) ₹ 1,50,000
(c) ₹ 2,50,000
(d) ₹ 1,12,500
Ans – d)
Vikas Bank Ltd. has outstanding 50,000, 5% Debentures of ₹ 100 each redeemable at a premium of ₹ 10 each. These debentures are to be redeemed. Amount that will be set aside out of profits to Debentures Redemption Reserve is
(a) ₹ 50,00,000
(b) ₹ 12,50,000
(c) ₹ 25,00,000
(d) Nil
Ans – d)
IDBI Ltd., an Other Financial Institution, has outstanding 50,000, 5% Debentures of ₹ 100 each redeemable at a premium of ₹ 10 each. These debentures are to be redeemed. Amount that should be invested in Debentures Redemption Reserve is
(a) ₹ 7,50,000
(b) ₹ 5,00,000
(c) ₹ 50,000
(d) Nil
Ans – d)
Premium Payable on redemption of debentures is accounted at the time of allotment of debentures due to
(a) Going Concern Concept
(b) Accrual Concept
(c) Prudence Concept
(d) Realisation Concept
Ans – c)
If 7%, 10,000 Debentures of ₹ 100 each are issued at discount of 10% redeemable at par, the discount on issue is debited to
(a) Debentures Suspense Account
(b) Premium on Redemption of Debentures Account
(c) Loss on Issue of Debentures Account
(d) Discount on Issue of Debentures Account
Ans – d)
If 8%, 10,000 Debentures of ₹ 100 each are issued at par and are redeemable at a premium of 10%, the premium payable on redemption is debited to
(a) Debentures suspense Account
(b) Premium on Redemption of Debentures Account
(c) Loss on Issue of Debentures Account
(d) Discount on Issue of Debentures Account
Ans – c)
Amount is not set aside to Debentures Redemption Reserve (DRR) if
(a) the debentures are not convertible
(b) the debentures are partly convertible
(c) the debentures are fully convertible
(d) the debentures are redeemable in cash
Ans – c)
A company before the redemption of debentures should transfer at least 10% of the nominal (face) value of outstanding debentures to Debenture Redemption Reserve (DRR), if
(a) it is a NBFC regulated by RBI
(b) it is a Housing Finance Company registered with National Housing Bank.
(c) It is an unlisted (NBFC or HFC) company
(d) It is an unlisted (Other than NBFC or HFC) company.
Ans – d)
Amount be transferred by a company to Debentures Redemption Reserve (DRR) from
(a) General Reserve
(b) Surplus, i.e., Balance in Statement of Profit & Loss
(c) General Reserve and/or Dividend Equalisation Reserve and/or Surplus, i.e., Balance in Statement of Profit & Loss
(d) General Reserve and/or Surplus, i.e., Balance in Statement of Profit & Loss
Ans – c)
Balance Sheet of a company shows 1,000 8% Debentures of ₹ 1000 each as a liability. Its Balance Sheet also shows following balances under the main head Reserves and Surplus:
(1) General Reserve ₹ 50,000
(2) Securities Premium ₹ 2,00,000
(3) Revaluation Reserve – ₹ 10,00,000
(4) Surplus, i.e., Balance in Statement of Profit & Loss – ₹ 1,50,000
If it is to transfer amount to DRR, it will transfer it as follows:
(a) ₹ 50,000 each from General Reserve and Securities Premium
(b) ₹ 50,000 each from General Reserve and Revaluation Reserve.
(c) ₹ 50,000 each from Securities Premium and Revaluation Reserve
(d) ₹ 50,000 each from General Reserve and Surplus, i.e., Balance in Statement of Profit & Loss
Ans – d)
Companies Except __ are not required to transfer at least 10% of the nominal (face) value of outstanding debentures to Debenture Redemption Reserve (DRR).
(a) Banking Companies
(b) Other Financial Companies defined in section 2(72) of the Companies Act, 2013
(c) Listed Companies
(d) Unlisted (Other than NBFC or HFC) company
Ans – d)
Star Hospitality Ltd. is a Non-NBFC or HFC Listed Company. It has outstanding 10,000, 7% Debentures of ₹ 100 each. it is to redeem 2,500, 7% Debentures on 31st March, 2022. It will transfer amount to DRR
(a) ₹ 1,00,000
(b) ₹ 25,000
(c) ₹ 75,000
(d) Nil
Ans – d)
Grand Hotels Ltd. an unlisted company is not a NBFC or HFC it has outstanding 10,000, 7% Debentures of ₹ 500 each. It is to redeem 2,500, 7% Debentures on 31st March, 2022. Before redemption of debentures, it will transfer to DRR amount equal to
(a) ₹ 5,00,000
(b) ₹ 1,25,000
(c) ₹ 3,75,000
(d) Nil
Ans – a)
Galaxy Ltd., a listed company is to redeem 5,000 6% Debentures of ₹ 100 each on 31st January 2022.
(a) It should set aside amount to Debentures Redemption Reserve (DRR) Account.
(b) It should not set aside amount to Debentures Redemption Reserve (DRR) Account
(c) It may or may not set aside amount to Debentures Redemption Reserve (DRR) Account
(d) None of the above
Ans – c)
Star Ltd., an unlisted (Non-NBFC or HFC) company has outstanding 10,000, 9% Debentures of ₹ 100 each due for redemption at a premium of 10%. It has a balance of ₹ 50,000 in Debentures Redemption Reserve. It will further transfer amount to Debentures Redemption Reservef
(a) ₹ 50,000
(b) ₹ 60,000
(c) ₹ 9,50,000
(d) ₹ 5,60,000
Ans – a)
A company required to invest amount in Debentures Redemption Investment (DRI) should invest 15% of
(a) nominal (face) value of the outstanding debentures.
(b) nominal (face) value of the debentures to be redeemed by 31st March, of next year.
(c) nominal (face) value of the debentures not to be redeemed by 31st March, of next year.
(d) None of the above
Ans – b)
Following companies except __ are required to invest amount in Debentures Redemption Investment an amount not less than 15% of the debentures to be redeemed by 31st March of next year.
(a) Listed Companies
(b) Unlisted Companies (Other than NBFCs and HFCs)
(c) All India Financial Institutions, regulated by RBI
(d) Listed NBFC and HFC Companies
Ans – c)
The Companies Act, 2013 (Section) 71(4) read alongwith Rules) prescribes that a company required to invest amount in Debentures Redemption Investment (DRI) shall invest 15% of Debentures to be redeemed by 31st March of next year’s on or before 30th April of the Current Year’. A Company is to redeem 5,000, 6% Debentures of ₹ 100 each on 31st January, 2022. The company will
(a) invest ₹ 75,000 in DRI on 30th April, 2021
(b) invest ₹ 75,000 in DRI between 1st April, 2021 and 30th April, 2021
(c) invest ₹ 75,000 in DRI on any day before 1st April, 2021
(d) invest ₹ 75,000 in DRI on or any day before 30th April, 2021
Ans – d)
3 Aces Ltd., an unlisted (Non-NBFC or HFC) company, is to redeem 2,000; 9% Debentures of ₹ 100 each on 31st December, 2022. The company should invest 15% of ₹ 2,00,000 in specified securities on or before
(a) 30th April, 2021
(b) 30th April, 2022
(c) 31st December, 2021
(d) 31st December, 2022
Ans – b)
Best Finance Ltd. a listed (NBFC) is to redeem 5,000, 10% Debentures of ₹ 100 each on 30th June, 2022 and 10,000, 10% Debentures on 31st December, 2022. The company should invest in specified securities
(a) ₹ 2,25,000 on or before 30th April, 2021
(b) ₹ 2,25,000 on 30th April, 2022
(c) ₹ 2,25,000 on or before 30th June, 2022
(d) ₹ 2,25,000 on or before 30th April, 2022
Ans – d)
Mangla Tubes Ltd. a manufacturing company is to redeem 10,000, 10% Debentures of ₹ 100 each on 30th June, 2022 and 5,000, 10% Debentures on 31st July, 2023. The company should invest in specified securities.
(a) ₹ 2,25,000 on or before 30th April, 2022
(b) ₹ 2,25,000 on 30th April, 2022
(c) ₹ 1,50,000 on or before 30th June, 2022
(d) ₹ 1,50,000 on or before 3oth April, 2022
Ans – d)
Top Ramen Ltd., a listed Non-NBFC or HFC company, is to redeem 1,000, 10% Debentures of ₹ 100 each redeemable at 10% premium on 31st March, 2022. The company will invest in specified securities amount not less than
(a) ₹ 15,000
(b) ₹ 16,500
(c) ₹ 25,000
(d) ₹ 27,500
Ans – a)
Global Savings Bank Ltd. is to redeem 10,000; 10% Debentures of ₹ 100 each on 30th June, 2022. It should transfer amount to DRR and invest in DRI
(a) ₹ 1,00,000 and ₹ 1,50,000 respectively
(b) ₹ 1,50,000 and ₹ 1,00,000 respectively
(c) ₹ 1,50,000 and Nil respectively
(d) ₹ Nil and Nil
Ans – d)
IFCI Ltd., an other Financial Institution within the meaning of Section 2(72) of the Companies Act, 2013, is to redeem 40,000, 10% Debentures of ₹ 100 each on 31st December, 2022. It should invest in specified securities.
(a) ₹ 6,00,000
(b) ₹ 4,00,000
(c) ₹ 40,00,000
(d) Nil
Ans – d)
After redemption of debentures in lump sum, balance in Debentures Redemption Reserve (DRR) Account is transferred to:
(a) Capital Reserve
(b) Surplus, i.e., Balance in Statement of Profit & Loss
(c) General Reserve
(d) Capital Redemption Reserve
Ans – c)
If the debentures are redeemed in parts, Debentures Redemption Reserve (DRR) is
(a) transferred to General Reserve proportionate to debenture redeemed
(b) transferred to Capital Reserve proportionate to debentures redeemed
(c) transferred to General Reserve after all debentures have been redeemed
(d) transferred to Capital Reserve after all debentures have been redeemed
Ans – a)
Anmol Finance Ltd., a Listed NBFC, is to redeem 10,000, 8% Debentures of ₹ 100 each at a premium of ₹ 10 out of profit. Amount that should be invested in Debentures Redemption Investment is
(a) ₹ 1,50,000
(b) ₹ 1,65,000
(c) ₹ 3,15,000
(d) Nil
Ans – a)
H & S Housing Finance Ltd., an unlisted HFC company, has outstanding 10,000, 8% Debentures of ₹ 100 each redeemable at premium of ₹ 10 each. Out of these, 5,000 debentures are to be redeemed on 31st December, 2022. Debentures Redemption Reserve should be
(a) ₹ 1,37,500
(b) ₹ 1,25,000
(c) ₹ Nil
(d) ₹ 2,75,000
Ans – c)
G & S Ltd., an unlisted (Other than NBFC or HFC) company, has outstanding 10,000, 8% Debentures of ₹ 100 each redeemable at premium of ₹ 10 each. Out of these, 5,000 debentures are to be redeemed on 31st December, 2022. As on the date of the redemption, Debentures Redemption Investment should be
(a) ₹ 75,000
(b) ₹ 82,500
(c) ₹ 1,65,000
(d) ₹ 1,50,000
Ans – d)
Anubhav Financing Ltd., a listed NBFC, is to redeem its debentures of nominal (face) value ₹ 2,50,000 each on 30th June, 2021, 30th September, 2021, 31st December, 2021 and 31st March, 2022. The amount that should be invested in Debentures redemption Investment on or before 30th April, 2021 should be
(a) ₹ 37,500
(b) ₹ 1,50,000
(c) ₹ 2,50,000
(d) ₹ 10,00,000
Ans – b)
Anurag Ltd., a listed HFC, is to redeem its debentures of nominal (face) value ₹ 2,50,000 each on 3oth September, 2021, 31st December, 2021, 31st March, 2022 and 30th June, 2022. The amount to be invested in Debentures Redemption Investment on or before 30th April, 2021 should be
(a) ₹ 37,500
(b) ₹ 1,50,000
(c) ₹ 2,50,000
(d) ₹ 1,12,500
Ans – d)
If Maha Textiles Ltd, a listed textile manufacturing company is to redeem 5,000 7% Debentures of ₹ 100 each on 31st March, 2022 and 5,000 7% Debentures of ₹ 100 each on 30th June, 2022, it will invest amount in DRI and realise the investment as follows:
(a) invest ₹ 1,50,000 on or before 30th April, 2021 and realise ₹ 75,000 on 31st March, 2022 and balance ₹ 75,000 on 3oth June, 2022.
(b) Invest ₹ 75,000 on or before 30th April, 2021 and realise it on 31st March, 2022. It will reinvest ₹ 75,000 on or before 30th April, 2022 and realise it on 30th June, 2022.
(c) invest ₹ 75,000 on or before 30th April, 2021 and will realise it on 30th June, 2022.
(d) will not invest in DRI being a listed company.
Ans – c)
Happy-Go-Lucky Stores Ltd. an Unlisted Retail Store Chain has outstanding 20,000, 6% Debentures of ₹ 100 each. It is to redeem the debentures as follows:
(i) 2,500 Debentures on 31st December, 2021,
(ii) 5,000 Debentures on 31st March, 2022 and
(iii) balance debentures on 31st July, 2023.
Choose the correct option:
(a) It will transfer at least ₹ 2,00,000 to Debentures Redemption Reserve before 31st December, 2021 and invest in DRI at least ₹ 1,12,500 on or before 30th April, 2022.
(b) It will transfer at least ₹ 2,00,000 to Debentures Redemption Reserve before 31st December, 2021 and invest in DRI at least ₹ 1,12,500 on or before 30th April, 2021.
(c) It will transfer at least ₹ 2,00,000 to Debentures Redemption Reserve before 31st December, 2021 and invest in DRI at least ₹ 3,00,000 on or before 30th April, 2021.
(c) It will transfer at least ₹ 2,00,000 to Debentures Redemption Reserve before 31st December, 2021 and invest in DRI at least ₹ 3,00,000 on or before 30th April, 2022.
Ans – b)
Lucky Brass Ltd. is an Unlisted Company (Other than NBFC or HFC) has outstanding 20,000, 6% Debentures of ₹ 100 each. It is to redeem the debentures as follows:
(i) 7,500 Debentures on 31st March, 2022, and
(ii) balance Debentures on 31st July, 2022.
Choose the correct option:
(a) It will transfer ₹ 2,00,000 to Debentures Redemption Reserve before 31st March, 2022 and after redemption of debentures on 31st March, 2022 it will transfer ₹ 75,000 from DRR Account to General Reserve.
(b) It will transfer ₹ 2,00,000 to Debentures Redemption Reserve before 31st March, 2022 and after redemption of debentures on 31st March, 2022 it will transfer ₹ 75,000 from DRR Account to General Reserve. It will transfer balance amount of ₹ 1,25,000 from DRR Account to General Reserve after redemption of debentures on 31st July, 2022.
(c) It will transfer ₹ 2,00,000 to Debentures Redemption Reserve before 31st March, 2022 and after redemption of debentures on 31st March, 2022 it will transfer ₹ 1,25,000 from DRR Account to General Reserve.
(d) It will transfer ₹ 2,00,000 to Debentures Redemption Reserve before 31st March, 2022 and after redemption of debentures on 31st March, 2022 it will transfer ₹ 1,25,000 from DRR Account to General Reserve. It will transfer balance amount of ₹ 75,000 from DRR Account to General Reserve after redemption of debentures on 31st July, 2022.
Ans – b)
Greyhound Finance Ltd., a listed NBFC has 10,000, 9% Debentures of ₹ 100 each outstanding for redemption. It was to redeem the debentures by Draw of Lots as follows:
(i) 4,000, 9% Debentures on 31st March, 2022
(ii) 3,000, 9% Debentures on 31st July, 2022, and
(iii) 3,000, 9% Debentures on 30th September, 2022.
In the context of above details, out of the following options determine the action to be taken by the company.
(a) It will invest ₹ 60,000 (15% of ₹ 4,00,000) in DRI on or before 30th April, 2021. At the time of redemption of 4,000 Debentures on 31st March, 2022, it will not realise the investment. It will make further investment in DRI of ₹ 30,000 on or before 30th April, 2022 so that total investment in DRI is ₹ 90,000 (15% of ₹ 6,00,000). It will realise investment of ₹ 45,000 at the time of redemption of debentures on 31st July, 2022 and balance investment will be realised on 30th September, 2022.
(b) It will invest ₹ 1,50,000 (15% of ₹ 10,00,000) in DRI on or before 30th April, 2021. After redemption of debentures on 30th September, 2022, balance investment in DRI will be realised.
(c) It will invest ₹ 1,50,000 (15% of ₹ 10,00,000) in DRI on or before 30th April, 2021. AT the time of redemption of 4,000 Debentures on 31st March, 2022, it will realise the investment of ₹ 60,000 (15% of ₹ 4,00,000). After redemption of debentures on 30th September, 2022, balance investment in DRI will be realised.
(d) It will invest ₹ 1,50,000 (15% of ₹ 10,00,000) in DRI on or before 30th April, 2021. At the time of redemption of 4,000 Debentures on 31st March, 2022, it will realise the investment of ₹ 60,000 (15% of ₹ 4,00,000). After redemption of 3,000 Debentures on 31st July, 2022, it will realise investment of ₹ 45,000 and balance investment in DRI will be realised on 30th September, 2022.
Ans – a)
