Question 06 Chapter 10 of +2-A
6. SRC Ltd. has issued on 1st April 2017, 20,000, 12% Debentures of 100 each redeemable
by draw of lots as under:
During the year ended on 31st March 2018: 15%
During the year ended on 31st March 2019: 25%
During the year ended on 31st March 2020: 15%
During the year ended on 31st March 2021: 25%
During the year ended on 31st March 2022: 20%
How much minimum investment should be made by SRCC Ltd. as per Companies Act, 2013 before redemption of debentures? When should it be made?
The solution of Question 06 Chapter 10 of +2-A: –
| Year ended on |
Date of Investment |
Redeemable Amount | Minimum amount of DRI |
| 2018 March 31 |
2017 April 30 |
Rs 20,00,000 × 15% = Rs 3,00,000 |
Rs 3,00,000 × 15% = Rs 45,000 |
| 2019 March 31 |
2018 April 30 |
Rs 20,00,000 × 25% = Rs 5,00,000 |
Rs 5,00,000 × 15% = Rs 75,000 |
| 2020 March 31 |
2019 April 30 |
Rs 20,00,000 × 15% = Rs 3,00,000 |
Rs 3,00,000 × 15% = Rs 45,000 |
| 2021 March 31 |
2020 April 30 |
Rs 20,00,000 × 25% = Rs 5,00,000 |
Rs 5,00,000 × 15% = Rs 75,000 |
| 2022 March 31 |
2021 April 30 |
Rs 20,00,000 × 20% = Rs 4,00,000 |
Rs 4,00,000 × 15% = Rs 60,000 |
Section 71 (4) of the Companies Act, 2013 requires that an amount equal to at least 25% of the value of debentures is to be transferred to the Debenture Redemption Reserve Account. So, Rs 2,50,000 is required to be transferred to DRR i.e. 25.
Further, Rule 18 (7) requires every company that is required to create DRR to invest an amount at least equal to 15% of the value of debentures in specified securities. So, Rs 1,50,000 is to be invested in specified securities i. e. 15.
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T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
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