Current liabilities
Current provisions
Provisions for liabilities
Long-term provisions
Answer is Right!
Answer is Wrong!
The correct answer is: D. Long-term provisions
A premium on redemption of debentures account is a liability that arises when a company issues debentures at a premium. The premium is the difference between the face value of the debentures and the amount that the company actually receives when the debentures are issued. The company must set aside a provision for the redemption of the debentures, which is a liability that will be settled when the debentures are redeemed.
The provision for the redemption of debentures is classified as a long-term provision because it is not expected to be settled within one year. Long-term provisions are reported in the balance sheet as non-current liabilities.
The other options are incorrect because:
- Current liabilities are liabilities that are expected to be settled within one year.
- Current provisions are provisions that are expected to be settled within one year.
- Provisions for liabilities are provisions that are not expected to be settled within one year.