Accounting aspects of issue of debenture may be studied from three different sides.
1. What would be the consideration?
Ø Issued for cash
Ø Issued for consideration other than cash
Ø Issued as collateral security
2. What would be the issue price?
Ø Issued at par
Ø Issued at premium
Ø Issued at discount
3. How the redemption be made.
Ø Redeemed at par
Ø Redeemed at premium
Ø Redeemed at discount
Combining (2) and (3), the following are the options of issue:
a. Issued at par and redeemable at par
b. Issued at discount and redeemable at par
c. Issued at premium and redeemable at par
d. Issued at premium and redeemable at premium
e. Issued at par and redeemable at premium
f. Issued at discount and redeemable at premium
The accounting entries for the above six combinations are given in the table below
