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    • Question

      Company issues 5-year debentures ₹1,00,00,000 at par.

      Issue expenses ₹2,00,000. If company chooses to amortise issue expenses over life of debentures, annual amortisation is:
      A ₹40,000 Correct Answer Incorrect Answer
      B ₹20,000 Correct Answer Incorrect Answer
      C ₹2,00,000 in first year only Correct Answer Incorrect Answer
      D ₹1,00,000 Correct Answer Incorrect Answer

      Solution

      Annual Amortisation = Total Issue Expenses / Term of Debentures = 2,00,000 / 5 = ₹40,000.

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