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Question -

What is meant by ‘Premium on Redemption of Debentures’?



Answer -

Debenture redeemed at premium refers to the situation where Debentures are redeemed at a price which is more than its face value or nominal value. The difference between the redeemed price and face value of debenture is regarded as a capital loss and hence needs to be written off. The premium obtained on redemption of debenture is shown on liabilities side of balance sheet.

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