Class 12 Accountancy TS Grewal Solutions Volume 2 Chapter 9 - Issue of Debentures
FAQs on TS Grewal Class 12 Accountancy Volume 2 Chapter 9 Solutions
1. How can I find the correct, step-by-step solutions for TS Grewal Class 12 Accountancy Volume 2, Chapter 9 on Issue of Debentures for the 2025-26 session?
You can access reliable and detailed solutions for TS Grewal Class 12 Accountancy, Volume 2, Chapter 9, curated by subject matter experts on Vedantu. These solutions are updated for the CBSE 2025-26 syllabus and provide a step-by-step methodology for solving all the problems in the chapter, ensuring you understand the correct accounting treatment and presentation.
2. What is the correct journal entry method for issuing debentures at a premium, as shown in the TS Grewal solutions?
The TS Grewal solutions demonstrate a two-stage process for recording the issue of debentures at a premium. The key entries are:
- On receipt of application money: Bank A/c is debited and Debenture Application & Allotment A/c is credited.
- On allotment of debentures: The Debenture Application & Allotment A/c is debited, while the X% Debentures A/c is credited with the face value, and the premium amount is credited to the Securities Premium Reserve A/c.
3. What are the two accounting methods for treating debentures issued as collateral security, as per TS Grewal Chapter 9 solutions?
The solutions in TS Grewal's textbook explain two distinct methods for recording debentures issued as collateral security:
- Method 1 (No Journal Entry): In this method, no entry is passed in the company's books. A note is simply added in the Balance Sheet under the specific loan to disclose that it is secured by the issue of debentures.
- Method 2 (Journal Entry Passed): This method involves passing a journal entry: Debenture Suspense A/c Dr. To X% Debentures A/c. The Debenture Suspense account appears on the asset side of the Balance Sheet, and the debentures are shown on the liabilities side.
4. How do the TS Grewal solutions explain the accounting for the 'Issue of Debentures for Consideration Other Than Cash'?
For the issue of debentures for consideration other than cash (e.g., purchase of assets), the solutions follow a clear two-step process. First, an entry is passed to record the purchase of the asset by debiting the Asset A/c and crediting the Vendor's A/c. Second, an entry is passed to settle the payment by debiting the Vendor's A/c and crediting the X% Debentures A/c, along with any discount or premium on the issue.
5. Why is the 'Debenture Suspense Account' shown on the assets side of the Balance Sheet when it is created?
The 'Debenture Suspense Account' is shown on the assets side to act as a temporary placeholder that offsets the liability created by issuing debentures as collateral. Since these debentures do not represent a true liability until the company defaults on the primary loan, this fictitious asset is created to ensure the Balance Sheet remains tallied. It is not a real asset but an accounting tool for disclosure.
6. How do the TS Grewal solutions differentiate between writing off 'Discount on Issue of Debentures' and 'Loss on Issue of Debentures'?
The solutions clarify a key distinction:
- A Discount on Issue of Debentures is the difference between the face value and a lower issue price.
- A Loss on Issue of Debentures is a broader term that includes the discount on issue PLUS any premium that is payable on the redemption of those debentures.
Both are capital losses that must be written off, preferably first against the Securities Premium Reserve and then from the Statement of Profit and Loss, over the life of the debentures.
7. What is the fundamental difference in accounting treatment between Debenture Redemption Reserve (DRR) and Debenture Redemption Investment (DRI) as per the solutions?
The solutions highlight a crucial difference between these two concepts. Debenture Redemption Reserve (DRR) is an appropriation of profits set aside in a reserve to ensure funds are available for redemption; it is not a cash fund. In contrast, Debenture Redemption Investment (DRI) is a mandatory, actual investment made in specified securities, equivalent to at least 15% of the face value of debentures to be redeemed. One is a reserve, while the other is a tangible investment.
8. If a company issues debentures with terms of redemption at a premium, how do the solutions in TS Grewal demonstrate recording this future loss at the time of issue?
The TS Grewal solutions apply the prudence concept of accounting. When debentures are to be redeemed at a premium, this future outflow is a foreseeable loss. Therefore, at the time of issue itself, a 'Loss on Issue of Debentures Account' is debited with the amount of the future premium payable. This ensures that the potential loss is recognised immediately in the books, rather than waiting until redemption.

















