Suvidha Ltd. purchased machinery worth Rs.1,98,000 from Suppliers Ltd. The payment was made by issue of 12% debentures of Rs.100 each. How many…

When debentures are issued at a discount, the company receives less than the face value, but the liability recorded is at face value.

Given information:

• Machinery cost = Rs. 1,98,000
• Face value per debenture = Rs. 100
• Discount = 10%

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Calculating issue price per debenture:

Discount amount = 10% of Rs. 100 = Rs. 10

Issue price per debenture = Face value - Discount
= Rs. 100 - Rs. 10 = Rs. 90

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Calculating number of debentures:

Since the machinery worth Rs. 1,98,000 needs to be paid through these debentures issued at Rs. 90 each:

Number of debentures = $\frac{\text{Total payment to be made}}{\text{Issue price per debenture}}$Issue price per debentureTotal payment to be made​

= $\frac{1,98,000}{90}$901,98,000​

= 2,200 debentures

Note: The 12% mentioned refers to the interest rate on debentures and doesn't affect the calculation of number of debentures to be issued. The supplier will receive 2,200 debentures with a total face value of Rs. 2,20,000, though the actual consideration is Rs. 1,98,000.

Correct Option: 4