Case: On 1 June, Sindhu Finance Ltd purchased 5,000 12% debentures of ₹100 each at ₹104 cum-interest. Interest is payable on 31 March and 30 September. Under AS 13, the cost of the investment is:

Correct answer: C) ₹5,10,000

Explanation

Total paid = 5,000 x 104 = 5,20,000. This includes interest accrued from 1 April to 1 June (2 months) = 5,00,000 x 12% x 2/12 = 10,000, which is pre-acquisition interest and is excluded from cost. Cost of investment = 5,20,000 - 10,000 = ₹5,10,000.