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Royalty Accounts: 9/5/21 Prof. Santosh MK 1
Royalty Accounts: 9/5/21 Prof. Santosh MK 1
Royalty Accounts: 9/5/21 Prof. Santosh MK 1
9/5/21 Prof.Santosh MK 2
Royalty Agreement
A royalty agreement will normally contain clauses dealing with the following:
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Minimum Royalty and Short Workings
The payment of royalty is based on the unit of output produced. However, if the sum of
royalty is less than the minimum rent (if any), then the payment will be based on the
minimum rent (minimum royalty – minimum rent).
The difference between the royalty and the minimum rent is known as ‘Short Working’.
Normally, the tenant may obtain the right to recover the short-workings.
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Accounting Entries In The Books Of Lessor
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With maintaining minimum rent account:
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B. When Royalty Is more Than Minimum Rent:
To Lessee's A/C
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C. When Royalty Is Equal To The Minimum Rent:
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