X Ltd. (an unlisted company) wants to redeem 5,000, 5% Debentures of ₹ 100 each at 5% premium. How much amount it must transfer to Debenture Redemption Reserve, if it has already a balance of ₹ 20,000 in Debenture Redemption Reserve Account?

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KollegeApply · Accepted Answer

₹ 30,000 Explanation: • Face Value of Debentures = 5,000 $\times$ ₹ 100 = ₹ 5,00,000 • Required DRR (for an unlisted company) = 10% of face value = ₹ 50,000 • Existing DRR Balance = ₹ 20,000 • Additional amount to be transferred = ₹ 50,000 − ₹ 20,000 = ₹ 30,000

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