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Practice Questions
Test your understanding with targeted questions related to the topic.
Question 1
Easy
Define redemption in the context of debentures.
💡 Hint: Think about when a company must pay back its borrowed funds.
Question 2
Easy
What is a Debenture Redemption Reserve?
💡 Hint: Consider why companies need to set aside money for debts.
Practice 4 more questions and get performance evaluation
Interactive Quizzes
Engage in quick quizzes to reinforce what you've learned and check your comprehension.
Question 1
What is the meaning of redemption in relation to debentures?
- A process of issuing new debentures
- A repayment of the principal amount to debenture holders
- A method of increasing debenture price
💡 Hint: Think about what happens when a company clears its debt.
Question 2
True or False: A company must always use lump sum payment to redeem its debentures.
- True
- False
💡 Hint: Consider the flexibility in redemption methods.
Solve 3 more questions and get performance evaluation
Challenge Problems
Push your limits with challenges.
Question 1
A company has ₹5,00,000 in debentures due for redemption. It plans to redeem them using both lump sum and installments. If ₹3,00,000 is paid as a lump sum, and the rest is to be paid in two installments over the next six months, detail the journal entries required for each transaction.
💡 Hint: Consider each payment as a separate transaction to document.
Question 2
Analyze a scenario where a company issues ₹10,00,000 in debentures. If it pays ₹11,00,000 (including a premium of ₹1,00,000) upon redemption, how should this be recorded in journal entries, and why is it crucial?
💡 Hint: Focus on how premiums affect overall liabilities during redemption.
Challenge and get performance evaluation