Moon Ltd. issued 5,000 debentures of ₹100 each at a discount of 10%. The expenses on issue amounted to ₹20,000. The company wants to redeem the debentures at the rate of ₹1,00,000 each year commencing with the end of fif

Total amount of discount and expenses is ₹70,000 (₹50,000 + ₹20,000). It should be written off each year according to the ratios of the amounts outstanding. Year Ratio 1 5 2 5 3 5 4 5 5 5 6 4 7 3 8 2 9 1 Total 35 In each of the first five years, discount to be written off will be (₹70,000 x 5) / 35 = ₹10,000 each year 6th Year: (₹70,000 x 4) / 35 = ₹8,000 7th Year: (₹70,000 x 3) / 35 = ₹6,000 8th Year: (₹70,000 x 2) / 35 = ₹4,000 9th Year: (₹70,000 x 1) / 35 = ₹2,000