Brinda Ltd. has furnished the following information: (a) 25,000, 10% debentures of ₹100 each; (b) Bank Loan of ₹10,00,000 repayable after 5 years; (c) Interest on debentures is yet to be paid. Show the above items in the balance sheet of the company as at March 31, 2017.

Question

Accepted Answer

> [!TLDR]
> The 25,000 debentures of ₹100 each (total ₹25,00,000) and the bank loan of ₹10,00,000 are shown under Non-Current Liabilities as Long-term Borrowings (total ₹35,00,000), while the unpaid interest of ₹2,50,000 is shown under Current Liabilities (Other Current Liabilities).

Let us first understand the nature of each item and where it belongs in the Balance Sheet. A company's Balance Sheet is divided into two main sides: Equity & Liabilities and Assets. Under the Companies Act, 2013, liabilities are classified as Shareholders' Funds, Share Application Money Pending Allotment, Non-Current Liabilities, and Current Liabilities.

Debentures are long-term borrowings of the company. Since these are 10% debentures of ₹100 each, the total face value is 25,000 × ₹100 = ₹25,00,000. They are repayable after a fixed period (usually more than 12 months from the balance sheet date), so they appear under **Non-Current Liabilities** as "Long-term Borrowings."

The interest on debentures is a charge against profit, not an appropriation. It is an expense that has accrued but remains unpaid. Since it is due and payable within 12 months, it becomes a **Current Liability** — specifically under "Other Current Liabilities" or "Short-term Provisions" depending on the exact classification. Here, it is shown as "Interest accrued but not due on debentures" under Current Liabilities.

The bank loan of ₹10,00,000 is repayable after 5 years, which is clearly more than 12 months from the balance sheet date. Hence, it is also a **Non-Current Liability** under "Long-term Borrowings."

Now, let us present the relevant extract of the Balance Sheet of Brinda Ltd. as at March 31, 2017.

**Balance Sheet of Brinda Ltd. as at March 31, 2017 (Extract — Liabilities side only)**

| Particulars | Note No. | Amount (₹) |
|------------|----------|--------------|
| **EQUITY AND LIABILITIES** | | |
| **1. Shareholders' Funds** | | (Not given) |
| **2. Non-Current Liabilities** | | |
| (a) Long-term Borr

Balance Sheet Item	Originates From	Debit/Credit Nature
Capital	Capital Account	Credit balance (owner's claim)
Reserves & Surplus	Profit & Loss Appropriation Account	Credit balance (undistributed profit)
Long-term Borrowings	Loan Account (e.g., Bank Loan)	Credit balance (liability)
Trade Payables	Creditors Account	Credit balance (amount owed)
Fixed Assets	Asset Account (e.g., Machinery A/c)	Debit balance (what the business owns)
Inventories	Stock Account	Debit balance (goods on hand)
Trade Receivables	Debtors Account	Debit balance (amounts due from customers)
Cash & Bank	Cash/Bank Account	Debit balance (positive cash)

Particulars	Note No.	Amount (₹)
EQUITY AND LIABILITIES
1. Shareholders' Funds
2. Non-Current Liabilities
(a) Long-term borrowings	1	35,00,000
3. Current Liabilities
(a) Other current liabilities	2	2,50,000
TOTAL		37,50,000

Particulars	Note No.	Amount (₹)
EQUITY AND LIABILITIES
1. Shareholders' Funds		(Not given)
2. Non-Current Liabilities
(a) Long-term Borrowings	1	35,00,000
3. Current Liabilities
(a) Other Current Liabilities	2	2,50,000
TOTAL		37,50,000

Note No.	Particulars	Amount (₹)
1	Long-term Borrowings
	10% Debentures (25,000 debentures of ₹100 each)	25,00,000
	Bank Loan (repayable after 5 years)	10,00,000
	Total	35,00,000
2	Other Current Liabilities
	Interest accrued but not due on debentures (Working Note 1)	2,50,000
	Total	2,50,000

Q.Brinda Ltd. has furnished the following information:

Concept understanding — Balance Sheet Presentation

Balance Sheet Presentation – A First Look

Why Does It Matter?

The Format (as per NCERT Class 12)

Accounting Treatment – What Gets Debited/Credited?

Balance Sheet Presentation of Brinda Ltd. as at March 31, 2017

Extract of Balance Sheet of Brinda Ltd. as at March 31, 2017

Q.Brinda Ltd. has furnished the following information:

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