A Ltd. purchased on 1st April, 2024 8% convertible debenture in C Ltd. of face value of 2,00,000 @108. On 1st July, 2024 A Ltd. purchased another -…

Investment Account for the year ending on 31st December, 2024 Scrip: 8% Convertible Debentures in C Ltd. [Interest Payable on 31st March and 30th September] Date Particulars Nominal value (₹) Interest (₹) Cost (₹) Date Particulars Nominal Value (₹) Interest (₹) Cost (₹) 1.4.24 To Bank A/c 2,00,000 2,16,000 30.09.24 By Bank A/c 12,000 1.7.24 To Bank A/c (W.N.1) 1,00,000 2,000 1,10,000 [₹ 3,00,000 x 8% x (6/12)] 31.12.24 To P & L A/c [Interest] 14,033 1.10.24 By Bank A/c 80,000 84,000 1.10.24 By P & L A/c (loss) (W.N.3) 2,933 1.12.24 By Bank A/c (Accrued interest) (55,000 x .08 x 2/12) 733 1.12.24 By Equity shares in C Ltd. (W.N. 3 and 4) 55,000 59,767 31.12.24 By Balance c/d (W.N.5) 1,65,000 3,300 1,79,300 3,00,000 16,033 3,26,000 3,00,000 16,033 3,26,000 SCRIP: Equity Shares in C LTD. Date Particulars Cost (₹) Date Particulars Cost (₹) 1.12.24 To 8% debentures 59,767 31.12.24 By balance c/d 59,767 Working Notes: (i) Cost of Debenture purchased on 1st July = 1,12,000 - 2,000 (Interest) = 1,10,000 (ii) Cost of Debentures sold on 1st Oct. = (₹ 2,16,000 +1,10,000) x 80,000/3,00,000 = 86,933 (iii) Loss on sale of Debentures = 86,933- 84,000 = 2,933 Nominal value of debentures converted into equity shares = 55,000 [(₹ 3,00,000 – 80,000) x.25] Interest received before the conversion of debentures Interest on 25% of total debentures = 55,000 x 8% x 2/12 = 733 (iv) Cost of Debentures converted = (2,16,000 +1,10,000) x 55,000/3,00,000 = 59,767 (v) Cost of closing balance of Debentures = (2,16,000 +1,10,000) x 1,65,000/3,00,000 = 1,79,300 (vii) Closing balance of Debentures has been valued at cost. (viii) 5,000 equity Shares in C Ltd. will be valued at cost of 59,767 being lower than the market value - 75,000 (15x5,000) Note: It is assumed that interest on debentures, which are converted into cash, has been received at the time of conversion.