Why is premium on the issue of debentures considered a capital profit? Post category:Accountancy Reading time:1 mins read SOLUTION It is considered as a capital profit because it is not an income arising from the normal course of business operations. Please Share This Share this content Opens in a new window X Opens in a new window Facebook Opens in a new window Pinterest Opens in a new window LinkedIn Opens in a new window Viber Opens in a new window VK Opens in a new window Reddit Opens in a new window Tumblr Opens in a new window Viadeo Opens in a new window WhatsApp Read more articles Previous PostMention two differences between ‘Premium on Issue of Debentures’ and ‘Premium on Redemption of Debentures’. Next Post‘Interest paid on debentures is a charge against the profits of the company’. Is this statement correct? Give reason in support of your answer. (C.B.S.E. 2020, Kolkata, Lucknow) You Might Also Like On 1st April 2017, Sunrise Limited issued 5,000, 8% debentures of Rs. 100 each at a discount of 5%. What will be the total amount of interest for the year ending 31st March 2018? September 29, 2022 Amit and Vijay started a partnership business on 1st April, 2018. Their capital contributions were Rs. 2,00,000 and Rs. 1,50,000 respectively. The Partnership Deed provided as follows: (a) Interest on capital be allowed @ 10% p.a. (b) Amit to get a salary of Rs. 2,000 per month and Vijay Rs. 3,000 per month. (c) Profits are to be shared in the ratio of 3: 2. Net profit for the year ended 31st March, 2019 was Rs. 2,16,000. Interest on drawings amounted to Rs. 2,200 for Amit and Rs. 2,500 for Vijay. Prepare Profit and Loss Appropriation Account. July 21, 2022 Under which type of activity will you classify’ ‘Interest paid on long term borrowings’ while preparing Cash Flow Statement? October 4, 2022 Leave a Reply Cancel replyYou must be logged in to post a comment.
On 1st April 2017, Sunrise Limited issued 5,000, 8% debentures of Rs. 100 each at a discount of 5%. What will be the total amount of interest for the year ending 31st March 2018? September 29, 2022
Amit and Vijay started a partnership business on 1st April, 2018. Their capital contributions were Rs. 2,00,000 and Rs. 1,50,000 respectively. The Partnership Deed provided as follows: (a) Interest on capital be allowed @ 10% p.a. (b) Amit to get a salary of Rs. 2,000 per month and Vijay Rs. 3,000 per month. (c) Profits are to be shared in the ratio of 3: 2. Net profit for the year ended 31st March, 2019 was Rs. 2,16,000. Interest on drawings amounted to Rs. 2,200 for Amit and Rs. 2,500 for Vijay. Prepare Profit and Loss Appropriation Account. July 21, 2022
Under which type of activity will you classify’ ‘Interest paid on long term borrowings’ while preparing Cash Flow Statement? October 4, 2022