'' Issue of debentures for consideration other than cash '' what effect would such a transaction have on the position of the company? support your answer with accounting procedure

Sometimes, debentures are issued for consideration other than cash i.e. by issuing debentures to vendors against the purchase of assets or for the purchase of business as a whole. Now, when debentures are issued for consideration other than cash, in that case, a company's position is affected in the following ways.

1.  New Assets are acquired (shown in the Balance Sheet) and New Liabilities are taken over (shown in the Balance Sheet).

2. If the Purchase Consideration is more than the difference between the value of assets and the liabilities (i.e. net assets acquired), then the difference is debited to Goodwill Account. This is a case of purchase of goodwill for which the money is being paid. This goodwill appears in the Balance Sheet (Asset side).

3.If the Purchase Consideration is less than the difference between the value of assets and the liabilities,then the difference is credited to Capital Reserve Account as this results in a gain for the company which is not due to regular business operations. This Capital Reserve appears in the Balance Sheet (Liabilities side).