Terms of Issue of Debentures

Terms of Issue of Debentures – At the time of issue of debentures, the terms on which they are issued and will be redeemed are specified.

These terms of issue of debentures and other conditions could result in six different kinds of situations. These are –

  1. Issue at par and redemption at par
  2. Issue at discount and redemption at par
  3. Issue at premium and redemption at par
  4. Issue at par and redemption at premium
  5. Issue at discount and redemption at premium
  6. Issue at premium and redemption at premium




Journal Entries to be passed in each of the above mentioned cases –

1. Issue at par and redemption at par

Issue at par and redemption at par

2. Issue at discount and redemption at par

Issue at discount and redemption at par

3. Issue at premium and redemption at par

Issue at premium and redemption at par

4. Issue at par and redemption at premium

Issue at par and redemption at premium




5. Issue at discount and redemption at premium

Issue at discount and redemption at premium

6. Issue at premium and redemption at premium

Therefore, issuance and redemption of debentures can fall into any of the above six categories and journal entries are passed keeping in mind the terms of issue of debentures and the conditions so agreed.

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