Z Ltd. had issued following debentures: (a) 1,00,000, 10% fully conve

1.	Z Ltd. had issued following debentures: (a) 1,00,000, 10% fully convertible debentures of Rs. 100 each on 1st April, 2016 redeemable by conversion after 5 years. (b) 20,000, 10% Debentures of Rs.100 each redeemable after 4 years, 25% Debentures in Cash and 75% by conversion. State the amount of DRR required to be created as per the Companies Act,2013.
Answer» (a) As the debentures are fully convertible, there is no need for creation of Debenture Redemption Reserve. (b) For the non- convertible parts of debentures, DRR would created as follows: Amount required to be transferred to DRR (25% of Face value) =20,00,000 x 25% = 1,25,000

Z Ltd. had issued following debentures: (a) 1,00,000, 10% fully convertible debentures of Rs. 100 each on 1st April, 2016 redeemable by conversion after 5 years. (b) 20,000, 10% Debentures of Rs.100 each redeemable after 4 years, 25% Debentures in Cash and 75% by conversion. State the amount of DRR required to be created as per the Companies Act,2013.

Answer»

(a) As the debentures are fully convertible, there is no need for creation of Debenture Redemption Reserve.

(b) For the non- convertible parts of debentures, DRR would created as follows:

Amount required to be transferred to DRR (25% of Face value) =20,00,000 x 25% = 1,25,000