Attempt both the following questions:

(A) On 1st April, 2010 X Limited has 10,000, Rs. 100/- each, 12% debentures. The terms of issue provide that every year 1/4 of debentures are to be redeemed by making purchase from open market. During the year 2010-11, the company purchased the following debentures:

(i) 1,300 debentures at a market price of Rs. 97/- per debenture. These were cancelled subsequently.

(ii) 1,200 debentures at a market price of 99/- per debenture. Subsequently these were sold by company @ Rs. 101/- per debenture. Show necessary journal entries in the books of accounts.

(B) Jindal Aluminum Limited (JAL) acquired a machinery from Jagson Enterprises (JE) for a lease term of four years, which covers almost the complete economic life of the asset. The lease commences on 1st April 2009 and will expire on 31st March, 2013. The fair value of the machine at the commencement of the lease term is Rs. 4,00,890 and JAL is required to pay to JE an annual lease rent of Rs. 1,20,000 per annum and a guaranteed residual value of Rs. 30,000 at the end of the lease term. Calculate the implicit interest rate.