Explain the Different Methods of Redemption of Debentures

Under this method the. Payment Made in a Lump sum on Maturity.

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Debentures which are convertible into equity shares or in any other security either at the option of the company or the debentureholders are called convertible debentures.

. The company issued the debentures with a fixed maturity period. By Creation of Debenture Redemption Fund or Sinking Fund 2. Payment Made in Installments.

The debenture holders are paid their promised sum on the fixed date. Debenture Redemption Methods. Under this method a certain portion of the total debentures is redeemed every year over the life-time of the debentures and thus at the end of the life time of the debentures the debentures are fully redeemed.

The debentures which cannot be. A Sinking Fund for Redemption Method. This is the simplest option for redeeming the debentures.

Each method follows a unique billing method. A By annual drawings. Installment payments after the due date.

In this article we will discuss about the Redemption of Debentures- 1. Ex-interest Price and Cum-interest Price 3. The lump-sum is the total amount of principal of all the debentures if they are not redeemed at a premium or discount.

B Insurance Policy Method. These methods can be divided into the following categories. At the time of such maturity the value of the investment made by the debenture holders is repaid to them at a price that is at par with the face value of the debentures or at a.

In this case debentures are redeemed in one lump-sum at the end of stipulated period. In Instalments through a draw of lots. These debentures are either fully convertible or partly convertible.

3 rows Various companies may opt for different methods of redemption of debentures. One-time payment due- Lump-Sum. There are various types of debentures like redeemable irredeemableperpetual convertible non-convertible fully secured partly secured mortgage unsecured naked first mortgaged second mortgaged the bearer fixed floating rate coupon rate zero-coupon secured premium notes callable puttable etc.

Purchased Debentures from open Market. Redemption of Debentures in lump-sum means that the Debentures. The methods of redemption of the debt can be as follows.

There are many ways to repay debts. The debentures which cannot be. Following are the methods of redeeming the debentures.

Redemption of debentures by conversion. Under this method debentures are redeemed in instalments and debentures to be. Paying back in lump sum amount at at time Paying back in easy instalments Purchasing the debentures in the open market.

In this method of redemption of Debentures the amount is. By Creation of Debenture Redemption Fund or Sinking Fund. There are various ways for redemption debentures which are discussed.

The ideal method is to set aside every year a certain sum of money by creating a Sinking Fund or Debenture Redemption Fund. Debentures are invariably redeemable. By Lump-sum Payment.

Lump-Sum Payment on a Fixed Date. There are four methods of redemption of debentures which are shown as follows. Under this method The debentures are redeemed on maturity in the lump sum.

Redemption of the debentures refers to the paying back of the debt of the company raised in the form of debentures. Under this method the company redeems the debentures by paying the whole amount at once that is. Debentures which are convertible into equity shares or in any other security either at the option of the company or the debentureholders are called convertible debentures.

The company can purchase its own debentures at the cost of available funds. These debentures are either fully convertible or partly convertible. By purchase from open market.

Types of Debentures. METHODS OF REDEMPTION OF DEBENTURES. Introduction to Redemption of Debentures 2.

B Non-Convertible Debentures. The Companies Act has not laid down any conditions for the redemption of debentures. The basic accounting entries for redemption of debentures are.

Redemption of debentures by purchasing them in the open market. Conversion into shares and new Debentures. Payment Made in a Lump sum on Maturity.

Ii Redemption of Debentures by payment in installments. Introduction to Redemption of Debentures. Redemption of Debentures in Lump-sum at Maturity.

Debentures that have a specific date of redemption that is mentioned on the certificate and the company is bound to pay the personpersons holding the debenture the principal amount on that date. Debentures that do not mention a specific date for redemption. At the time of redemption we liquidate our provision and repay the amount of debentures it has two sub-methods.

In this method we invest provision for redemption of debentures in insurance company we pay premium of insurance annual. Redemption of debentures Methods and Meaning i Redemption of Debentures in lump-sum at one go.

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