Question

Astha Cranky Ltd. purchased assets of the value of ₹ 3,60,000 from Anand Ltd. and made the payment of purchase consideration by issuing 11% Debentures of ₹ 100 each at a discount of 10%. The number of debentures issued by Astha Cranky Ltd. were

• A. 3,600.
• B. 36,000.
• C. 40,000.
• D. 4,000.

Hint:

Always remember to use the Issue Price (Face Value - Discount or Face Value + Premium) as the denominator, not the Face Value, when calculating the quantity of securities issued for a fixed consideration.

Answer 1

The Correct Option is D

Concept: When a company issues debentures for consideration other than cash (such as for the purchase of assets), the number of debentures to be issued is calculated based on the purchase price and the issue price per debenture.

Step 1: Determine the Issue Price per debenture.
the face value of each debenture is ₹ 100 and they are issued at a 10% discount. * Face Value: ₹ 100 * Discount: 10% of ₹ 100 = ₹ 10 * Issue Price: ₹ 100 - ₹ 10 = ₹ 90

Step 2: Calculate the number of debentures issued.
The total purchase consideration to be paid is ₹ 3,60,000. \[ \text{Number of Debentures} = \frac{\text{Purchase Consideration}}{\text{Issue Price per Debenture}} \] \[ \text{Number of Debentures} = \frac{3,60,000}{90} \] \[ \text{Number of Debentures} = 4,000 \]