ABC Ltd. Purchased for cancellation its own 5,000, 9% Debentures of Rs.100 each for Rs.95 per debenture. The brokerage charges Rs.15,000 were incurred. Calculate the amount to be transferred to capital reserve.
Amount paid for 5,000 Debentures= 4,75,000+15,000= Rs. 4,90,000
The nominal value of debentures to be redemption/cancelled= Rs.5,00,000
Amount of profit on redemption to be transferred to capital reserve
=Rs. 5,00,000- Rs.4,90,000= Rs.10,000
