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- of Minimum Rent in Case of Strike/Lock out7. Short
- Minimum Rent
- Deduction of Income Tax:
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- Royalty is a periodical payment based on output or sale for the use of a fixed asset or
This can be in the form of similar contracts or industry-specific averages. From the below given information’s, please open prepare the necessary accounts in the books of M/s Black Diamond Limited. Where Royalties are less than minimum rent and shortworkings are recoverable in next years. Sometime, there may be stoppage of work due to conditions beyond control like strike, flood, etc. in this case, minimum rent is required to be revised as provided in the agreement. Copyright − Copyright provides a legal right to the author (of his book/s), the photographer , or any such kind of intellectual works. Copyright royalty is payable by the publisher of a book to the author of that book or to the photographer, based on the sale made by the publisher.
In case of the patent, publisher of the book pays royalty to the author of the book on the basis of number of books sold. So, holder of patent gets royalty on the basis of output and the mine owner gets royalty on the basis construction bookkeeping of production. Royalty is payable by a user to the owner of the property or something on which an owner has some special rights. A royalty agreement is prepared between the owner and the user of such property or rights.
of Minimum Rent in Case of Strike/Lock out7. Short
Strike period is 3 months, as such, the amount of Minimum Rent will be Rs. 9,000 (i.e., Rs. 12,000 × 9/12). Royalty based on output should be debited to Manufacturing Account or Production Account and royalty based on sales should be debited to Trading Account or Profit and Loss Account. The short-working which is recouped is to be shown as current asset in the asset side of the Balance Sheet. If there is no clause in the Royalty agreement about the Minimum Rent, there will neither be any short-working nor any recoupment.
If payment is made to purchase the right or property that will be treated as capital expenditure instead of a Royalty. As such, if actual royalty earned is less than Rs. 9,000 there will be short-working and, similarly, if actual royalties are more than Rs. 9,000, the excess portion may be recouped (of course, if there is any short-working balance). I’ll be glad to help you record the royalty https://www.globalvillagespace.com/GVS-US/main-features-of-bookkeeping-and-accounting-in-the-real-estate-industry/ payment taken from your business account to your personal account. Record the following transactions for Redeker Co. in the general journal. Discover the meaning of a journal entry and a trial balance, types of journal entries, how a general ledger differs from a trial balance, and some examples. Prepare journal entries to record the following transactions of Daisy King Ice Cream Company.
Minimum Rent
B) In every lease agreement, payment of royalty is compulsory but the provisions of minimum rent may or may not be applicable. Minimum Rent is the amount below which landlord never accepts in any year from the person who has to pay royalty in case of mines. Minimum Rent is also known as Fixed Rent, Dead Rent, Flat Rent or Contract Rent.
- You are required to prepare Journal entries and Ledger account to record the above transactions in the books of B Company.
- The Minimum Rent or actual royalty, whichever is higher, is to be paid to the lessor.
- To record the transaction, you debit Prepaid Royalties and credit Cash.
- Royalty is a periodical sum based on the output payable by the lessee to the lessor for having utilized the rights of the lessor.
- When you choose Make reports final, the system considers the month of reporting complete and you can no longer extract or maintain master data for the parameters.
A company recorded $3,500 of depreciation on its factory building. A lessee makes a lease payment of $79,940 to the lessor in an operating lease transaction. Every financial transaction that incurs in a company need to be recorded in the books of accounting.