Issue of Debentures — Part 2: Other than Cash, Collateral, Interest and Write-off: visual lesson, CBSE Class 12 Accountancy

Lesson

Debentures beyond cash

Part 2 — debentures for consideration other than cash, as collateral security, interest on debentures, and writing off discount or loss on issue.

In this lesson you will

Record debentures issued to vendors for assets or a business, with goodwill or capital reserve
Show debentures issued as collateral security by both methods
Record interest on debentures and write off discount or loss on issue in the year of issue

Part 2 at a glance

Concept

Issue for consideration other than cash

Number of debentures = amount payable ÷ issue price (not face value).

No cash changes hands for the debentures

Worked example

Worked example 5: machinery for debentures

On 1 April 2026 Konkan Cold Chain Ltd buys machinery for ₹4,40,000 from Sahyadri Machines and pays in 9% debentures of ₹100 each at a premium of 10%.

Journal of worked example five: machinery debited and the vendor credited 4,40,000; the vendor debited, debentures credited 4,00,000 and securities premium 40,000
Date	Particulars	Dr (₹)	Cr (₹)
1 Apr 2026	Machinery A/c Dr	4,40,000
	To Sahyadri Machines' A/c		4,40,000
	(Being machinery bought from Sahyadri Machines)
1 Apr 2026	Sahyadri Machines' A/c Dr	4,40,000
	To 9% Debentures A/c		4,00,000
	To Securities Premium A/c		40,000
	(Being 4,000 9% debentures of ₹100 each allotted to the vendor at a premium of 10%)

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