On 1st Jan, X Ltd. purchased 1,000 debentures of ₹100

Solution

Workings (step-by-step): 1. Purchase (cum-interest) on 1 Jan o Face value = 1,000 × ₹100 = ₹1,00,000 o Price = ₹105 (cum). Since the last coupon date is 31 Dec, accrued interest = ₹0 on 1 Jan. o Cost of investment = 1,000 × ₹105 = ₹1,05,000 (entirely capital cost). 2. Sale (ex-interest) on 1 Apr: 200 debentures o Ex-interest price received = 200 × ₹98 = ₹19,600 (capital proceeds). o Accrued interest received separately (Jan–Mar = 3 months): 200×₹100×12%×3/12=₹600  (This is interest income, not part of capital profit/loss.) 3. Carrying cost of units sold o Cost per debenture = ₹105 o Cost of 200 = 200 × 105 = ₹21,000 4. Capital profit/loss on sale (compare clean amounts) Capital proceeds (ex-interest) − Cost sold= ₹19,600−₹21,000=₹1,400 loss  Note: The ₹600 accrued interest is credited to Interest Income, not netted with capital profit/loss.