On Jan 1 20X1 Q Ltd Had Issued 500 Debentures

question 18

Multiple Choice

On Jan 1 20X1 Q Ltd had issued 500 debentures at a face amount of $5 000 each, 10% interest payable annually in arrears.There was a premium on issue of $750 per debenture.These debentures were publicly tradable after initial issue.The terms of issue state that the debentures can be bought back directly from the holder upon payment by Q Ltd of a premium of $400 per debenture and accrued interest.On July 1 20X6 Q Ltd bought back 100 of the debentures via the open market (Australian Securities Exchange) where the market price was steady at $4 300.
-This buyback transaction involves which of the following amounts?

• A)A premium on redemption of $40 000
• B)Interest expense of $25 000
• C)A discount on redemption of $70 000
• D)None of these

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Definitions:

Consent

Agreement or approval given freely and willingly by a competent individual, often necessary in legal, medical, or personal contexts.

Appellate Court

A superior court that examines the rulings of inferior courts for the proper application of the law.

Scanty

Lacking in amount, quantity, or sufficiency; minimal or insufficient in size, quantity, or degree.

Reverse

To change to the opposite direction, position, or course of action.