Question

Assertion (A): Irredeemable debentures are also known as perpetual debentures. Reason (R): The company does not give any undertaking for the repayment of money borrowed by issuing such debentures. They are repayable on the winding up of the company or on the expiry of a long period. Choose the correct option from the following:

• A. Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).
• B. Both Assertion (A) and Reason (R) are correct, but Reason (R) is {not} the correct explanation of Assertion (A).
• C. Assertion (A) is incorrect, but Reason (R) is correct.
• D. Assertion (A) is correct, but Reason (R) is incorrect.

Hint:

Irredeemable debentures are considered perpetual liabilities and are typically used for long-term funding.

Answer 1

The Correct Option is A

Irredeemable debentures, lacking a fixed repayment date, are generally perpetual. They become repayable upon the company's winding up or the conclusion of a long-term contract. This repayment structure justifies their classification as irredeemable or perpetual.