ROYALTY ACCOUNTS 1. Fixe Fixed d Recou Recoupm pmen entt Prepare an analysis table from following details: Roya Royalty lty payable payable = ! ps" ps" Per Per ton ton of o#tp# o#tp#t$ t$ %inim %inim#m #m Rent Rent Rs" Rs" &'! &'!! ! p"a"$ p"a"$ rig(t rig(t of re)o#pme re)o#pment nt of s(ort s(ort wor*in wor*ings= gs= #pto + years$ years$ o#tp#t o#tp#t d#ring d#ring t(e first + years=, years=,!'!! !'!!!' !' ,-'!!!' ,.'!!! tons respe)ti/ely"
0" Without minimum Rent account under Fixed Recoupment 1yot(i %ining Company is engaged in wor*ing a )oal mine" On 1an#ary ,' ,22. it entered into an agreement wit( t(e owner of t(e land w(i)( pro/ided for$ i" A royalty royalty of of Rs"0! Rs"0! per per ton of )oal )oal raised raised ii" A minim#m minim#m rent rent of rs"!' rs"!'!!! !!! per ann#m ann#m iii" T(e re)o/ery re)o/ery of of s(ort wor*ings wor*ings wit(in wit(in a period period of first + years T(e o#tp#t d#ring t(e 3irst years was$ Years Years
,22. ,222 0!!! 0!!, 0!!0
Output (Tons) (Tons)
0!!! Tons 00! Tons +'!!! Tons +.!!! Tons !!! Tons
T(e amo#nts d#e to landlord in respe)t of ea)( year were paid at t(e end of t(e year" 1o#rnalise t(e transa)tions and prepare 4a5 Royalties A6) 4b5 S(ort wor*ing A6)" and 4)5 Land A6)" in t(e boo*s of t(e 1yot(i %ining Comopany +" T(e 7arnata*a 7arnata*a %inerals %inerals Ltd" a)8#ired a)8#ired a lease lease from a landlord landlord for t(e t(e p#rpose of e9tra)ting e9tra)ting ore" t was agreed t(at t(e )ompany s(o#ld' pay Rs",0 per ton of ore raised s#b;e)t to a minim#m rent of Rs"+<'!!! a year and t(at t(e s(ort wor*ing )o#ld be re)o#ped in t(e first + years" T(e o#tp#t raised for t(e first - years was: Years Years
,22. ,222 0!!! 0!!,
Output (Tons) (Tons)
,&! Tons 0&! Tons +&! Tons -&! Tons
rite #p 1o#rnal entries of t(e Royalties A6)"' S(ort wor*ing A6)" > Landlord A6)" -" ?(anab ?(anabad ad Coal Coal Company Company Ltd"' Ltd"' too* a lease of a mine on a royalty royalty of Re", Re", per ton of )oal raised" T(e dead rent being Rs"
0..-200"do)@prasad pres
Output (Tons) (Tons)
0!'!!! Tons <.'!!! Tons ,'
,6
Pass ne)essary ;o#rnal entries in t(e boo*s of ?(anabad Coal Company" " %r" A;it( (as patent of safety lo)*s" Be ga/e t(e rig(t of man#fa)t#re and sale of lo)* to National Traders for ,- years on t(e following terms: Royalty will be Rs" on ea)( lo)* sold and minim#m rent is Rs",'!!'!!! per year" A))o#nts are )losed on +, st ?e)ember e/ery year" Sales of lo)*s are as follows: years
2000
2001
2002
2003
No. o !oc"s ,<'!!! ,.'!!! 00'!!! +<'!!! so!d Open t(e ne)essary a))o#nts in t(e boo*s of National Traders' if t(e amo#nt of royalty is less t(an minim#m rent' t(e defi)it w(i)( is *nown as s(ort )omings )an be re)o#ped in t(e following two years of t(e year of defi)it"
<" D owned )ertain patent rig(ts" Be granted a Li)ense to Y to #se s#)( rig(ts on Royalty basis" T(e following are t(e rele/ant parti)#lars: Year Output Year #inimum Roya!ty Rent $arned ,22
+'&!
0'!!
,22< '!!! -'!!! ,22& <'0! -'!! T(e defi)ien)y of any one year is to be set off against e9)ess payable wit(in ne9t two years" Ei/e ;o#rnal entries in t(e boo*s of Y" &" %r" E#pta wrote a boo* and got it p#blis(ed wit( National P#blis(ers on t(e following terms: a" Royalties wo#ld be ,F of t(e Sale pro)eeds of ea)( year" b" %inim#m payment of Rs",!'!!! p"a" )" E#pta to re/ise t(e boo* w(en re8#ested by t(e p#blis(ers and s#bmit t(e re/ised edition wit(in < mont(s of t(e re8#est" f E#pta delays beyond < mont(s' (e (as to pay National P#blis(ers at Rs"!! per mont( for t(e period of delay' f#rt(er in t(e year of delay' minim#m payment was not to apply" T(e n#mber of )opies sold and sale pri)e of ea)( )opy were as follows: No. o &a!e price At t(e end of 0!!0' %r" E#pta was re8#ested to Year copies o each re/ise t(e boo*" T(e re/ised man#s)ript so!d copy (Rs) st rea)(ed t(e p#blis(er 200' 0'!!! 0! on , O)tober 0!!+" Ei/e 1o#rnal entries in t(e boo*s of National -'!!! 0! 200 P#blis(ers" 0'!!! 0 200 ." %r" Ram Rao too* a mine on lease on ,","0!!," Royalty is paid (alf yearly at ! paise per ton" %inim#m rent is Rs"
0!!, #pto +! t( 1#ne 0..-200"do)@prasad pres
%roduction(Tons)
-'!!! 06
0!!, #pto +, st ?e)ember 0!!0 #pto +! t( 1#ne 0!!0 #pto +, st ?e)ember 0!!+ #pto +! t( 1#ne 0!!+ #pto +, st ?e)ember Prepare 4a5 Royalties A6) 4b5 S(ort wor*ing A6)" Rama Rao"
&'!!! <'0!! '!!! .'!!! '!!! and 4)5 Landlord A6)" in t(e boo*s of %r"
2" On ,st 1an#ary ,22+ 7arnata*a Collieries leased o#t some land for a minim#m rent of Rs"+!!! for t(e , st year' Rs"!!! in t(e 0 nd year and t(ereafter Rs",!'!!! p"a" merged into a royalty of Re"!"! per ton wit( power to re)o#p s(ortwor*ing o/er two years after o))#rring t(e s(ort wor*ing" T(e ann#al o#tp#t for t(e years ending are: Years
Output (Tons)
,22+ ,22,22 ,22< ,22&
+'!!! Tons .'
Pass t(e ne)essary entries and prepare t(e ledger a))o#nts in t(e boo*s of 7arnata*a Collieries #nder minim#m rent met(od" ,!"Eo*#l %ines Company too* a lease from a landlord for a period of ,! years from , st 1an#ary' ,22! on a royalty of Rs" per ton of )oal raised wit( a dead rent of Rs"0!'!!! and power to re)o#p s(ortwor*ing d#ring t(e first fo#r year of t(e lease" T(e ann#al o#tp#t was as follows: Years
Output (Tons)
,22! ,22, ,220 ,22+ ,22-
0'!!! Tons +'!!! Tons -'!!! Tons -'!! Tons '!!! Tons
Prepare 4a5 ?ead Rent A6)"' 4b5 Royalties A6)"' 4)5 S(ortwor*ing A6)" > 4d5 Landlord A6)" in t(e boo*s of Eo*#l %ines Co" ,," %ysore %ining Company too* a mine on lease for a period of 0! years' at a royalty of Re", per ton" T(e minim#m rent was fi9ed at Rs"-'!!! for t(e first year' Rs"
1
2
3
*
'
%roduction (in 0'!!! -'!! <'!!! 2'!!! ,0'!!! Tons) Prepare 4a5 %inim#m Rent A6)"' 4b5 Royalty A6)"' 4)5 S(ortwor*ing A6)" > 4d5 Landlord A6)" in t(e boo*s of %ysore %ines Co" 0..-200"do)@prasad pres
+6
,0"Iengal Coal Ltd" leased a )olliery from s(an*ar at a royalty of Rs","! per ton of )oal raised wit( a minim#m rent of Rs",!'!!! p"a" Ga)( yearHs e9)ess of minim#m rent o/er a)t#al royalties is re)o/erable o#t of royalties of ne9t fi/e years" n t(e e/ent of a stri*e t(e minim#m rent not being rea)(ed' t(e lease pro/ided t(at t(e a)t#al royalties earned all t(e rental obligation for t(e year" T(e o#tp#t of t(e )olliery for t(e first se/en years was as follows: Year
rite #p %inim#m Rent A6)" > S(an*arHs A6)" in
%roduction (Tons)
,22+
Nil
,22,22 ,22< ,22& ,22. ,222
+'!!! -'!!! <'!!! .'!!! -'!!! ,!'!!!
4Stri*e for + mont(s5 A6)"' Royalties A6)"' S(ortwor*ing t(e boo*s of Iengal Coal Limited"
,+"T(e Iombay Colliery Co" are lessees of a mine at a dead rent of Rs"0'!!!p"a"' merging into royalty of ! paise per ton" ?ead rent paid in e9)ess of a)t#al royalties' is re)o/erable d#ring t(e ne9t fi/e years s#))eeding t(e year in respe)t of w(i)( s#)( e9)ess was paid" n t(e e/ent of a stri*e' if t(e a)t#al royalty was less t(an t(e dead rent' it was to dis)(arge all rental obligation" T(e first year in respe)t of w(i)( t(e dead rent was payable' e9pired on t(e +,st ?e)ember ,22!" T(e e9)ess paid in respe)t of t(e first year was Rs"0'!!!$ of t(e se)ond year Rs",'-!$ and of t(e t(ird year Rs"+!" T(e fo#rt( year t(e a)t#al royalties amo#nted to Rs"0'&! in t(e fift( year to Rs"+'0! in t(e si9t( year to Rs"+'
,22 ,22< ,22& ,22. ,222 0!!!
%roduction (Tons)
0'!!! ,-'!!! ,2'!!! 0+'!!! ,'!!! 0'!!!
4Stri*e for + mont(s5
Prepare Royalties A6)"' S(ortwor*ings A6)" > %r" E#ptaHs A6)" in t(e boo*s of Ii(ar Coal Company"
0..-200"do)@prasad pres
-6
,"Rames( wrote a boo* on 3inan)ial A))o#nting and got it p#blis(ed wit( Bimalaya P#blis(ing Bo#se on t(e terms t(at royalties will be paid at Rs" per )opy sold' s#b;e)t to a minim#m rent of Rs",'!!! p"a"' wit( a rig(t of re)o#pment of s(ortwor*ings o/er t(e first fo#r years of t(e royalty agreement" T(e details are as #nder: No. o copies No. o copies Years in c!osin+ printed stoc" ,22< ,'!! ,!! ,22& 0'!!! 0!! ,22. +'!!! +!! ,222 -'!!! -!! 0!!! '!!! !! Prepare %inim#m Rent A6)"' Royalties A6)"' S(ortwor*ings A6)" > Rames(Hs A6)" in t(e boo*s of Bimalaya P#blis(ing Bo#se" ,<"Amar obtained from I(as*ar a lease of some )oal bearing land on , st 1an#ary ,22' t(e terms being a royalty of Rs"- per ton of )oal raised s#b;e)t to minim#m rent of Rs"0!'!!! per ann#m wit( a rig(t of re)o#pment of s(ortwor*ings o/er t(e first fo#r years of t(e lease" T(e following are t(e rele/ant parti)#lars: ,!osin+ Years &a!es (Tons) &toc" (Tons) ,22 0'0!! +!! ,22< +'+!! !! ,22& -'.!!
0..-200"do)@prasad pres
6
