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Q.

You cannot use debenture premium to:

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a

Write off the capital loss.

b

Write off the premium on redemption of shares or debentures.

c

Pay dividends.

d

Write off discount on issue of shares.

answer is C.

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Detailed Solution

The premium on debentures cannot be utilised to pay dividends. It can be used to write off premiums permitted on share or debenture redemptions, preliminary expenses, expenses or the commission paid or discount allowed on any share or debenture issue, and so on.

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