Debenture Insert Formulas For Free

Debenture are financial instrument which carries a certain percentage of interest. Debentures are like other debts. Interest paid on debenture is an expense and charged to profit & loss account.

Debentures are shown in the balance sheet of the company under the item Secured loans. Debentures are usually secured against the assets of the company. In case of debentures they are not secured by providing a collateral or security.

Accounting Treatment of Issue of Debenture: The journal entries passed for issuing debentures are the same as in the case of shares. Only 'Debenture A/c' is used in place of 'Share Capital A/c'. The rate of interest is usually pre-fixed with Debenture A/c.

Debentures are included as part of long-term debt in the liabilities section of the balance sheet, within the subsection for non-current liabilities (i.e., debt with a maturity date greater than one year).

Total interest on debentures = 10% * $200,000 = $20,000 (Note that this full amount must be charged to the profit and loss account, whether paid or not).

Coupon Rate = (Total Annual Coupon Payment/Par Value of the Bond) *100.

Debentures in accounting represent the medium to a long-term instrument of debt that large companies use to borrow money. The term debenture is used interchangeably with the terms bond, note, or loan stock. It is a long-term liability of the company.

Companies use various methods to pay debenture holders. These include the installment method, open market debenture purchase, lump sum, and conversion method. Some companies also create sinking funds for debenture redemption.

An interest paid is an award to all the debenture holders for investing in the debentures of an enterprise. Usually, interest is paid in a periodical systematic manner at a fixed rate of interest on the face value of the debentures and is being treated as a charge on the profits.

Bond Price = 100 / (1.08) + 100 / (1.08) ^2 + 100 / (1.08) ^3 + 100 / (1.08) ^4 + 100 / (1.08) ^5 + 1000 / (1.08) ^ 5. Bond Price = 92.6 + 85.7 + 79.4 + 73.5 + 68.02 + 680.58. Bond Price = Rs 1079.9.