QuickBooks reserves the right to change pricing, features, support and service at any time.Nearly 8 million customers: Based on number of global QuickBooks subscribers as of July 2021.In cases where the lessee fails to recover the Short Workings within the stipulated time, the Short Workings lapse and is debited to the P&L Account for the period in which the recoupment lapses. This time period can be fixed or fluctuating. Such a period lays down the number of years during which Short Workings can be recouped or recovered by the lessee. In other words, the clause of recoupment in Royalty Agreement provides the right to the lessee to recover excess payment made by him to the lessor for complying with the clause of minimum rent in the previous years.įurthermore, a time period is stipulated in the agreement. Such a process of adjusting Short Working capital is known as recoupment of Short Workings. Therefore, in the following years Short Workings is adjusted against the excess royalty amount. This provision allows carry forward of short workings in order to adjust the same in future. Typically, the agreement entered by the lessor and the lessee under Royalty Accounting provides for a provision. This can however vary depending upon the terms of the agreement. Since, the amount of minimum rent to be paid is fixed, it is also known as Fixed Rent or Dead Rent. Therefore, the lessee pays minimum rent or the actual royalty amount, whichever is higher. It is a term included in the contract in the interest of the landlord as it assures minimum rent even in cases of lower sales or output. Minimum rent is fixed at the time when the lessor enters into an agreement with the lessee. Such a guaranteed minimum amount so received by the lessor is called the minimum rent. This is despite the fact that the actual royalty amount, which is calculated based on the items produced or sold, is less than the minimum rent to be paid. That is, lessee is required to pay minimum amount to the lessor. To get rid of such a situation, the lessor requires a minimum amount of payment to be paid by the lessee irrespective of the number of goods produced or sold by the lessee. In other words, when there is no or little production or sale, the lessor would be at a loss since no or less amount of royalty would be received from the lessee. In such a case, the lessor would receive no or little royalty directly impacting lessor’s royalty income. Now, there can be cases when the number of goods produced or sold are nill or relatively low. This royalty is determined on the basis of number of goods produced or quantum of goods sold. As mentioned above, the lessor enters into a contact or an agreement with the lessee for the payment of royalty.
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