Looking for How is Discount or loss on issue of Debentures written off with the examples.
See, Discount or loss on issue of Debentures is a capital loss and is first written off against the capital profit.
Following is the detail accounting treatment of Writing off Discount or loss on issue of debentures as per class 12 syllabus
How is the Discount on issue of Debentures is written off
Discount or Loss on Issue of Debentures is a capital loss for a company, which is written off in the year it is incurred, i.e., in the year the debentures are allotted from:
Following is the writing off procedure.
Discount or loss or Issue of Debentures is written off from Securities Premium Reserve.
If Securities Premium Reserve does not have balance or is not adequate to write off total discount or loss, balance discount or loss is written off from Capital Reserve.
In case, balance is still left in Discount or loss on Issue of Debentures Account, it is written off from Statement of Profit and Loss.
Journal Entry of writing off Discount or loss on issue of debentures
The Journal Entry passed is:
Securities Premium Reserve A/c Dr.
Capital Reserve A/c Dr.
Statement of Profit and Loss A/c Dr.
To Discount or Loss on Issue of Debentures A/c
(Discount or Loss on the issue of Debentures written off)