Royalty Accounts

Description

Royalty Accounts

Contents:-

1. Royalty is payable for use of special right.

2. Royalty is payable on the basis of production.

3. Royalty is different from rent.

4. User is called lessee and owner is called landlord.

Meaning of Royalty

Difference between Royalty and Rent

Kinds/ Types of Royalty :

1. Mining Royalty

2. Brick Making royalty

3. Oil well Royalty

4. Patent Royalty

5. Machine royalty

6. Copyright royalty

7. Technical Knowledge Royalty

8. Trade mark royalty

9. Royalty to Foreign company for sale of production.

10. Other Royalty

Important terms :

1. Landlord

2. Lessee

3. Royalty

4. Minimum Rent or Dead Rent

5. Short working : S/W = Minimum rent − Royalty

6. Surplus : Surplus = Royalty − Minimum rent

7. Recouping of short working

Condition of Recouping Short working

Books of Lessee

Calculation Table

Journal Entries in the books of lessee

Minimum Rent in case of strike or Lockout or other reason

Minimum Rent Reduced

Nazrana Account

Minimum Rent Account Method Or Dead Rent Account Method

Journal Entries in the books of Landlord

Meaning of Royalty

Royalty means a special type of rent which shall be received by owner of mines, owner of patent, author of books etc. for transfer of right of extraction of minerals from mine. Right of publishing and sell of books or producing or sell any patented goods etc. An individual, firm or any other institution pays a certain amount as per agreement for acquiring a special right for using other’s property. This amount which is paid as a consideration for the use of special rights is called royalty

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