Kumar Ltd. purchased on 1st April, 2025 8% convertible debenture in Hello Ltd. of face value of ₹ 2,00,000 @ ₹ 108. On 1st July, 2025 Kumar Ltd.…

Investment Account for the year ending on 31st December, 2025 Scrip: 8% Convertible Debentures in Hello Ltd. [Interest Payable on 31st March and 30th September] Date Particulars Nominal Value Interest (₹) Cost (₹) Date Particulars Nominal Value Interest (₹) Cost (₹) 1.4.2025 To Bank A/c 2,00,000 - 2,16,000 30.09.2025 By Bank A/c [₹3,00,000 X 8% X 6/12] - 12,000 - 1.7.2025 To Bank A/c (W.N.1) 1,00,000 - 1,10,000 1.10.2025 By Bank A/c 80,000 - 84,000 31.12.2025 To P & L A/c [Interest] - 14,033 - 1.10.2025 By P & L A/c (loss) (W.N.3) - - 2,933 1.12.2025 By Bank A/c (Accrued interest) (₹ 55,000 x .08 x 2/12) - 733 - 1.12.2025 By Equity shares in Hello Ltd. (W.N. 3 and 4) 55,000 - 59,767 31.12.2025 By Balance c/d (W.N.5) 1,65,000 3,300 1,79,300 3,00,000 14,033 3,26,000 3,00,000 16,033 3,26,000 SCRIP: Equity Shares in Hello LTD. Date Particulars Cost (₹) Date Particulars Cost (₹) 1.12.2025 To 8% debentures 59,767 31.12.2025 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 Hello Ltd. will be valued at cost of ₹ 59,767 being lower than the market value ₹ 75,000 (₹ 15 x5,000) Note: It is assumed that interest on debentures, which are converted into cash, has been received at the time of conversion.