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How to write off discount when …

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How to write off discount when debentures are redeemable in instalments .. Is it in the ratio of debentures being redeemed (TS Grewal) or in the ratio of balance debentures(DK Goel) ?
  • 1 answers

Amit Rao 7 years, 8 months ago

When the debenture are redeemed by installment the discount or loss on issue of debenture should be written off in the ratio in which the amount of debenture has he been used for example if the developer of 5 lakh has been issued at 6% discount and the debentures of Rupees 1 lakh Arya payable are repayable each year the amount of discount will be return of each year in the ratio of debenture outstanding at the beginning of ECR each year in this case in this case the amount of discount transferred to statement of profit and loss account will be in ratio of 500000 ratio 400000 ratio 300000 ratio 200000 ratio 100000. The reason is the reason is that in the first year company as utilised large amount of funds example rupees 5 lakh in the business where else in the subsequent years it has used lesser amount points example 4 lakh 3 lakh 2 lakh 1 lakh respectively as such the amount of discount transferred to statement of profit and loss account will be in the ratio 5 ratio 4 ratio 3 ratio 2 ratio 1
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