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