Registered debentures are duly recorded in the register of debenture holders. It is maintained by the company and which can be transferred only through a regular instrument of transfer.

Secured debentures are debentures secured by a charge on the fixed assets of the issuer company. For instance, mortgage debentures secured on land of the company. When the issuer company fails on payment of either the principal or interest amount, the assets of the company can be sold to repay the liability to the investors.

Debentures are an important instrument to raise long term debt capital. They are issued by a company and bear a fixed rate of interest and the company promises to pay the debt at a future date. The debentures that can be converted into equity shares within a specified period of time are known as convertible debentures.

The debentures which are payable to bearer and whose names do not appear in the register of debenture holders are known as “Bearer Debentures”. Coupons for interest are attached to the document and interest is paid to the holders as it falls due. Bearer Debentures are transferable by mere delivery.

Unsecured debentures are debentures that are not supported by a collateral security. No specific assets will be set aside against unsecured debentures. It is basically a loan with out any protection. They are backed only by the general creditworthiness of the issuer.

Debentures that are repaid before other debentures are repaid are known as first debentures. First debenture holders have the right over the company's asset at first.

Debentures are given out to the creditors as a promise to repay the debt held by the company at a fixed rate of interest. Some of the debentures are convertible and non-convertible. The debentures which cannot be converted into equity shares are called as non-convertible debentures.

The second debentures are those which are paid after the first debentures have been paid back. Second debenture holders have the secondary charge over the company's assets.

Debentures bear a fixed rate of interest to be paid at a future date to the the creditors. As fixed charge instruments, debentures put a permanent burden of interest payments on the earnings of a company.

Debentures are issued to the investors from which funds are raised. They are given debenture receipt as a promise of repayment of capital bearing a fixed rate of interest. Hence debenture holders receive interest on their investment.

Goodwill Account-

• Sometimes a company purchases some assets and liabilities from the vendor and purchase consideration (amount of payment) is determined in advance. 
  
• Payment is made by issuing debentures by the company; it is called issue of debentures for consideration other than cash. Such issue of debentures may be at par, discount or premium.
•  The entry for acquisition of assets & liabilities and issuance of debenture is shown as above:

         a.   Assets A/c                     Dr.

                  To Liabilities A/c

                  To Vendor’s A/c

             (Purchase of assets & liabilities from vendor)

         b.  Vendor’s A/c                 Dr.

                   To Debentures A/

              (Issue of debentures to vendors)

•  In such cases, if purchase consideration is more than assets & liabilities acquired then the difference is goodwill and amount of difference to “Goodwill A/c” which is calculated as below:

     Goodwill= Purchase consideration- Assets acquired- Liabilities taken over

• The entry of goodwill will be as shown below:

           Goodwill A/c                 Dr.

                     To Liabilities A/c

                     To Vendor’s A/c

         (Purchase of assets & liabilities from vendor)

Noncurrent liabilities are those obligations not due for settlement within within one year. These liabilities are separately classified in an entity's balance sheet, away from current liabilities. Examples of noncurrent liabilities are:

• Long-term portion of debt payable

• Long-term portion of bonds payable

The aggregate amount of noncurrent liabilities is routinely compared to the cash flows of a business, to see if it has the financial resources to fulfill its obligations over the long term. If not, creditors will be less likely to do business with the organization, and investors will not be inclined to invest in it. A factor to be considered in this evaluation is the stability of an organization's cash flows, since stable flows can support a higher debt load with a reduced risk of default.

Securities Premium Account-

·  When debenture is issued at a price more than its face value, they are said to be issued at a premium.

·  For example: if a debenture of ₹10 is issued at ₹12; ₹2 will be called as premium on that debenture.

·  The amount of premium on debenture is a capital profit so it is credited to a separate account called “Securities Premium Account” or “Securities Premium Reserve” and it is shown in Balance sheet under the head “Reserved and Surplus”.

· Though there is no legal restriction on issue of debenture at premium but there is restriction on utilization of securities premium a/c.

·  Utilization of securities premium a/c is restricted to following purposes:

       a.  Writing off preliminary expenses

       b.  Writing off expenses, discount allowed on issue of shares/debentures or commission paid on issue of debentures/shares (underwriting commission)

       c.  Issue of fully paid bonus shares to equity shareholders

       d.  Providing for payment of premium payable on redemption of preference shares or debenture

       e.  For buy back of its own shares.

A creditor is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed.^[1] The first party, in general, has provided some property or service to the second party under the assumption (usually enforced by contract) that the second party will return an equivalent property and service. The second party is frequently called a debtor  or borrower. The first party is called the creditor, which is the lender of property, service, or money.

Creditors can be broadly divided into two categories: secured and unsecured. A secured creditor has a security or charge, which is some or all of the company’s assets, to secure the debt owed to him. This could be, for example, a mortgage, where the property represents the security. An unsecured creditor does not have a charge over the company’s assets.

The balance of the Debentures Sinking Fund after redemption of debentures is transferred to General Reserve account. It is the amount which is kept separately out of redeemed amount from debentures, that is why it is transferred to general reserve account.

Debentures redeemable after 10 years of issue are shown as long-term borrowings since debenture holders invest for a long period of time. Debentures refer to the liabilities of the company that will not become due within one year.