How these ratios come?
Dear Student
In the question, it must be given that Discount to be written off over 5 yearn in the ratio of debentures outstanding.
Therefore Ratio of Debentures outstanding over 5 years is calculated as Number of Debentures outstanding in each year as follows :
Ratio = Number of Debentures Outstanding in Year 1 : Number of Debentures Outstanding in Year 2 : Number of Debentures Outstanding in Year 3 : Number of Debentures Outstanding in Year 4 : Number of Debentures Outstanding in Year 5.
Ratio = 20,00,000 : 20,00,000 : 18,00,000 : 14,00,000 : 8,00,000 or 20 : 20 : 18 : 14 :8.
And Discount on issue of Debentures is Written off in the proportion of this ratio calculated above.
Hope this helps
Regards
In the question, it must be given that Discount to be written off over 5 yearn in the ratio of debentures outstanding.
Therefore Ratio of Debentures outstanding over 5 years is calculated as Number of Debentures outstanding in each year as follows :
Ratio = Number of Debentures Outstanding in Year 1 : Number of Debentures Outstanding in Year 2 : Number of Debentures Outstanding in Year 3 : Number of Debentures Outstanding in Year 4 : Number of Debentures Outstanding in Year 5.
Ratio = 20,00,000 : 20,00,000 : 18,00,000 : 14,00,000 : 8,00,000 or 20 : 20 : 18 : 14 :8.
And Discount on issue of Debentures is Written off in the proportion of this ratio calculated above.
Hope this helps
Regards