Is premium on redemption of debentures appropriation of profit?
If yes, why?
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No, premium on redemption of debentures is not an appropriation of profit.
Premium on redemption of debentures is the amount paid by the company to the debenture holders over and above the face value of the debentures at the time of their redemption. It is essentially a capital expenditure and not a revenue expenditure.
Appropriation of profits, on the other hand, refers to the allocation of profits among different heads, such as payment of dividends, transfer to reserves, payment of taxes, etc. It is a process by which a company uses its profits for various purposes.
Therefore, premium on redemption of debentures is not considered as an appropriation of profit because it is not a distribution of profits among the shareholders or other stakeholders of the company. It is a payment made to the debenture holders upon redemption of their debentures, which is treated as a capital expenditure and reduces the capital base of the company.