When a company purchases its own debentures for cancellation at a price lower than the face value, the difference is a profit of capital nature. Since it arises from capital transactions (redemption of liabilities) and not trading, it is transferred to Capital Reserve.
When own debentures are cancelled, any profit on cancellation is transferred to:
CUET UG 2022 — Accountancy Company Accounts
2022mcqmedium
When own debentures are cancelled, any profit on cancellation is transferred to:
Official previous-year question
Held on 8 Aug 2022 · Verified 13 Jul 2026.
Options
- A
Profit and Loss Account
- B
General Reserve
- C
Debenture Redemption Reserve
- D
Capital Reserve
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