in draw of lots method, if DRI is not encashed every year, what is the amount that should be invested in the first year. for ex: debentures worth rs. 200000 is to be redeemed in 5 equal instalments through draw of lots method . so, what is the amount of debenture investment during the first year of redemption? Is it the entire 15% of 200000(30000) or 30000/5(6000) ?
Shri Lakshmi and Sankar!!
In case of Draw of Lots Method, DRI is created every year and encashed every year. In the given example, if debentures worth Rs 2,00,000 are to be redeemed in 5 equal annual instalments, the amount of debentures to be redeemed each year will be:
So, the amount of DRI created will be 15% of the amount of debentures redeemed in the year i.e.
On the date of redemption of debentures, we will encash DRI and then make payment to the debentureholders since DRI is created and encashed to provide ease in payment to debentureholders.
For more details, you can refer to the study material available on our website. Follow the link given below:
https://www.meritnation.com/cbse/class12-commerce/studymaterial/accountancy/company-accounts-and-analysis-of-financial-statements/issue-and-redemption-of-debentures/436_2434_17012#slide11_method-ii-redemption-by-draw-of-lots
For any queries, you can always get back to us!
In case of Draw of Lots Method, DRI is created every year and encashed every year. In the given example, if debentures worth Rs 2,00,000 are to be redeemed in 5 equal annual instalments, the amount of debentures to be redeemed each year will be:
So, the amount of DRI created will be 15% of the amount of debentures redeemed in the year i.e.
On the date of redemption of debentures, we will encash DRI and then make payment to the debentureholders since DRI is created and encashed to provide ease in payment to debentureholders.
For more details, you can refer to the study material available on our website. Follow the link given below:
https://www.meritnation.com/cbse/class12-commerce/studymaterial/accountancy/company-accounts-and-analysis-of-financial-statements/issue-and-redemption-of-debentures/436_2434_17012#slide11_method-ii-redemption-by-draw-of-lots
For any queries, you can always get back to us!