CBSE Class 12 Accountancy Company Account Issue of Debentures VBQs

CBSE Class 12 Accountancy Company Account Issue of Debentures VBQs read and download in pdf. Value Based Questions come in exams for Accountancy in Standard 12 and are easy to learn and helpful in scoring good marks. You can refer to more chapter wise VBQs for Class 12 Accountancy and also get latest topic wise very useful study material as per latest 2021 NCERT book for Class 12 Accountancy and all other subjects for free on Studiestoday designed as per latest Grade 12 CBSE, NCERT and KVS syllabus and examination pattern

CBSE Class 12 Accountancy Company Account – Issue of Debentures VBQs

1.Board of Directors of Pearl Global Industries Ltd wants to start a new unit at a remote area Assam.

The new unit can be started in the form of labour intensive with a capital of Rs 5 crore or in the form of automatic plant with a capital of Rs.30 crore. Directors decided to start this unit in the form of labour intensive for generation of employment opportunities in remote areas. Therefore thecompany purchased land for Rs.2,00,00,000 and machinery for Rs.3,00,00,000. In consideration of these assets company issues 13% Debentures at par.

Identify the values involves in the decision of directors of pearl Global Ltd. and Journalize the transactions.

1. Balanced Regional Development

Generation of employment

Upliftment of weaker section

2.According to the SEBI guidelines, Debentures can be secured by a charge on the assets of the company . A ‘Debenture Trust Deed’ is entered into between the company and the debenture holders.

Identify the values involved in this decision of SEBI.

2. Safety of investment

Legal compliance

Protection of interest of debenture holders

3. A Ltd. issued Rs. 10 lacs 9% debentures of Rs.100 each on 1st April, 2008 redeemable in five equal instalments through draw of lots beginning from the year ending 31st march 2011. Assume that the company has transferred sufficient amount to debenture redemption reserve.

State the values symbolized by redeeming the debentures through draw of lots.

3. Judicious method of settlement of liabilities

Foresightedness

4.Creation of Debenture Redemption Reserve by company indicates which value?

4. Foresightedness

Judicious method

Adherence to SEBI guidelines and Companies Act

5.INFRA Developers Ltd., ( an infrastructure company) issued 5, 00,000 8% Debentures of Rs. 100 each on April 1, 2008 redeemable on April 1, 2012. How much amount of Debenture Redemption Reserve is required before the redemption of debentures?

Which value SEBI wants to promote by having special provision for Infrastructure Company?

5. National Development

Aid to capital formation

6.. During the time of recession, Shiva Ltd., got a good deal with a company located in Sweden. The contract will result in more amounts of profit and foreign exchange. The company already enjoyed a good reputation in the industry. It decided to increase its capacity utilization and hence was in need of funds.

On 1st April 2012, after careful analysis, the company offered 10,000,10% convertible debentures of the face value of Rs.100 each at a discount of 10%. These debentures are convertible into equity shares of Rs.100 each at a premium of 10%. At present, the return on investment of Shiva Ltd., is 25%. At the time of issue of debentures the prevailing interest rate was 8%. The issue was successfully completed.

Identify the values which were considered by the board of directors while issuing the debenture.

6. Socially Responsible

Opportunity given to the lenders to become shareholders

7. Parvathy Ltd., engaged in the production of Ayurvedic products. The capital structure of the company is as follows.

1,00,000 equity shares of Rs.100 each Rs.1,00,00,000

50,000 nonconvertible 8% Debentures of Rs.100 each Rs.50,00,000

In order to expand the business activities, the company issued 25,000 8% Debentures of Rs.100 each at par on 1st January 2010 which are convertible into equity shares of Rs.100 each at a discount of 10%. The return on investment of the company is 10%. Identify the values ignored at the time of issue of debentures.

7. Values Ignored:

Financial Risk

Dilution of control

Wealth maximization

8. The following balances appeared in a company balance sheet on 31.03.2012

Debenture Redemption Reserve A/C Rs.2,50,000

10,000 9%Debentures of Rs.50 each Rs.5,00,000

On the above date the debentures were redeemed. For the purpose of redemption the company issued 5,000 equity shares of Rs.100 each at par to the public.

Identify the values ignored by the board of directors.

8. Values Ignored:

Weak financial foresight

Reduction in market value of share

Deprive the rights of existing shareholders

9. A Ltd., wanted to expand its business. The current rate of ROI is 25%. The prevailing rate of interest is 10%. The projected ROI after the expansion of the business is 30%. A Ltd., enjoys a good reputation in the industry. After careful analysis, the Board of Directors decided to raise additional funds through the

issue of Debentures. Accordingly on 1.1.2012 the company issues 10,000 10% Debentures of Rs.100 each redeemable at a premium of 10% after 4 years.

Identify the values considered by the Board of Directors from the point of view of shareholders.

9. More employment opportunities

Benefit of Trading on Equity

Financial control

Improves the standard of living of the society

10. Jay Ltd., has the following balances in its balance sheet.

Securities premium Rs.44,00,000

Debenture Redemption reserve Rs.2,40,00,000

12% Debentures Rs.2,40,00,000

Under writing commission Rs.20,00,000

The company decided to redeem its 12% Debentures at a premium of 10%. Jay Ltd., utilized the securities premium for the purpose of redeeming the debentures and writing off the under writing commission.

Identify the values involved in this problem.

10. Financial Strength

Wealth maximization

Adherence to Companies Act

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