The issue of debentures may be issued:
(I) at par
(Ii) With a cousin
(Iii) With a discount
(I) Issuance of Debentures by Par:
Emissions are said to be issued at par when the amount received is equal to the par value of the obligations; For example, the issuance of Rs. 1,000 debentures for Rs. 1,000.
(Ii) Issuance of Debentures at Discount:
When the bonds are issued by the company at a price lower than its nominal value (nominal value) is said to be issued at a discount. It is important to note that the Commercial Companies Law has not placed any restrictions on the maximum discount limit. For example, if a debenture of Rs. 1,000 is offered to the public in Rs. 950, it's a matter of discount. Here Rs. 50 in each of the obligations is a loss for the company. As a principle of equity, it is desirable to cancel this loss.
(Iii) Issuance of Premium Obligations:
If the bonds are issued at a price higher than the nominal value (nominal value), said issue becomes a premium issue. For example, if a debenture of Rs. 1000 is offered in 1,050, this is a case of bond issue to premium. The excess of the issue price over the nominal value is a premium.
The premium is a capital gain for the company, so it must be credited to 'Securities Premium Reserve A / c'. The amount of the premium in the obligations should not be transferred to the profit and loss account because it is not a benefit derived from the normal operations of the company. Since this is a gain, it is shown in the liability of the balance sheet under "Reserves and surpluses".