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Debenture Redemption Reserve Account

Debenture redemption reserve account or sinking fund account or debenture redemption fund account are same. It means to create some reserve out of profit for repaying the amount of debenture. Company will transfer this reserve to debenture redemption reserve account. According to new amendment of Indian company law 1956, to create debenture redemption reserve is compulsory. After issue of debentures, company will start to deposit some % of its net profit to debenture redemption reserve account. With this, we can protect debenture holders' money. Company may invest this money in secured and profitable projects. Debenture redemption reserve account is liability account of company.

Proforma of this account is given below:
  
                           Debenture Redemption Reserve Account 

Dr. Cr.

Balance c/d End of first year  Profit and loss
appropriation account
balance c/d end of second year and
subsequent  years 
balance b/d

interest on sinking fund investment a/c

Profit and loss appropriation account
Loss on sale of sinking
fund investment a/c
Debenture a/c ( Loss on cancellation of own
debentures)
General Reserve a/c
time when debentures art to
be  redeemed
Balance b/d

Profit on sale of sinking fund
investment a/c

Debenture a/c ( Profit on cancellation)
interest on sinking fund investment a/c

Comments

: 1
  1. i have question when debentures redeemed in lots whether every year after redemption the equivalent balance is transferred to general reserve?

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Accounting Education: Debenture Redemption Reserve Account
Debenture Redemption Reserve Account
Accounting Education
https://www.svtuition.org/2011/07/debenture-redemption-reserve-account.html
https://www.svtuition.org/
https://www.svtuition.org/
https://www.svtuition.org/2011/07/debenture-redemption-reserve-account.html
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