Class 12 Accountancy - Company Accounts and Analysis of Financial Statements - Chapter Issue and Redemption of Debentures NCERT Solutions | What is meant by redemption of debenture

Welcome to the NCERT Solutions for Class 12th Accountancy - Company Accounts and Analysis of Financial Statements - Chapter Issue and Redemption of Debentures. This page offers a step-by-step solution to the specific question from Exercise 1, Question 16: what is meant by redemption of debentures by conve....
Question 16

What is meant by redemption of debentures by conversion?

Answer

When a debenture holder can convert his/her debentures into shares or new debentures after – the expiry of a specified period of time, then it is known as redemption of debentures by conversion. As the company do not need to pay any funds for the redemption, so there is no need to maintain the Debenture Redemption Reserve (DRR). The new shares or debentures may be issued at par, premium or at discount.

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