G.S. Rai company ltd. purchased assets of the book value of Rs. 98,000 from another firm. It was agreed that p

Question

G.S. Rai company ltd. purchased assets of the book value of Rs. 98,000 from another firm. It was agreed that purchase consideration be paid by issuing 11% debentures of Rs. 100 each. Assume debentures have been issued at discount of 20%Identify the number of debentures issued by the company to the v

Accepted Answer

To find the number of debentures to be issued to the vendor, we use the following formula:

Number of Debentures = \frac{Purchase Consideration}{Issue Price per Debenture}

Given metrics:Purchase Consideration =

Rs. 98, 000

Face Value per Debenture =

Rs. 100

Discount Percentage =

20%

Calculate the discount amount per debenture:

Discount = 20% of 100 = Rs. 20

Calculate the issue price per debenture:

Issue Price = Face Value - Discount = 100 - 20 = Rs. 80

Now, calculate the number of debentures:

Number of Debentures = \frac{98 , 000}{80} = 1, 225 debentures

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