Debenture Insert Tick For Free

Bonds are generally issued during the inception of a business whereas Debentures are issued during the course of the business. Bonds are backed up by a collateral or security or a physical asset but Debenture are backed up by the promise made by the issuer.The rate of interest is higher in Debenture compare to a bond.

The major types of debentures are:Registered Debentures: Registered debentures are registered with the company.Bearer Debentures:Secured Debentures:Unsecured Debentures:Redeemable Debentures:Non-redeemable Debentures:Convertible Debentures:Non-convertible Debentures:More items...?Aug 6, 2018

If the Company has issued the Debentures and they are to be redeemed after one year, then they are shown under Non-Current Liabilities in the Balance Sheet. If the Company has issued the Debentures and they are to be redeemed within one year, then they are shown under Current Liabilities in the Balance Sheet.

Companies use debentures as fixed-rate loans and pay fixed interest payments. However, the holders of the debenture have the option of holding the loan until maturity and receive the interest payments or convert the loan into equity shares.

There are different journal entries in connection with the issue of debentures: On the receipt of Application Money. On allotment, the application money on debentures allotted is transferred to debentures account. Amount Due on Allotment (Along with Premium)

Put simply, a debenture is the document that grants lenders a charge over a borrower's assets, giving them a means of collecting debt if the borrower defaults. Debentures are commonly used by traditional lenders, such as banks, when providing high-value funding to larger companies.

2.4.3 Debentures issued at Premium The amount of premium is credited to Securities Premium account and is shown on the liabilities side of the balance sheet under the head Reserves and Surpluses.