Royalty Accounts Online Test

Royalty Account is a


Royalty is calculated either on the Basis of


Royalty paid on sales is debited to


Royalty based on production is debited to


Execc of minimum rent over royalty payable is called


Excess of royalty payable over minimum rent is called


Shortworkings recoverable in future are shown in the balance sheet on the


Shortworkings not recoverable are debited to the


When Shortworkings are recovered, debit is given to


Recounpment of Shortworking can be


The Fixation of Minimum rent guarantees the landlord the receipts of the minimum amount in case of low outpur or sales.


Lumpsum Payment for the outright purchase of a patent, mine or book is treated as Royalty.


Lumpsum payment for purchase of patent, mine or book is shown in the Balance Sheet as


Ground rent or Surface rent is the


Shortworkings can be recouped only when the lessee has a right to recoup and there is a surplus. If there is no provision in the royalty agreement for recoupment of shortworkings, the same should be transferred to the P/L A/c in the same year of the shortworkings.


The lumpsum payment for the purchase of a patent, mine or book is know as


Royalty and Rent implies the Same meaning.


X Colliery Co. Ltd., leased a property from Z at a Royalty of Rs.5 per ton with a minimum rent of Rs.10,000 p.a. Each year’s excess of minimum rent over royalty is recoverable out of the Royalties of next three years. In the event of strike and the minimum rent is not reached, the lease provided that the actual royalty earned for the year discharged all the rental obligations for that year.

The result of the working was as follows:

Year 1991 1992 1993(Strike) 1994 1995

Output (in tons) 1,500 2,100 1,200 1,600 2,200

What is the minimum rent for the year 1993?


The ABC Mine Company obtained a mine on lease for a period of 30 years beginning from 1st January 1992 on the following terms:

1. To pay minimum rent of Rs.24,000 per year.

2. Each year’s excess of minimum rent over the actual royalties, i.e., short workings can be recovered during the subsequent two years.

3. Due to accident or strike minimum rent is to be reduced by 25% for that year.

4. Royalty was to be calculated at 50 paise per tonne.

Production during four years from 1992 to 1995 was as follows:

Year 1992 1993 1994 1995

Production (tons) 28,000 36,000 60,000 44,000

In 1995 there was a strike for three months. What is the M/R for the year 1995?


The Assam Coal Company Ltd. holds a lease of coalmines for a period of 10 years commencing from 1st January 1989. According to the lease terms the company is to pay one rupee per ton as royalty with a minimum rent of Rs.20,000 per year. Short workings can however, be recovered out of the royalty in excess of the minimum rent of the next two years only. In the year of a strike, the minimum rent is to be reduced to 60%.

The output for the 6 years ending 31st December 1990 has been as under:

Year 1989 1990 1991 1992 1993 1994(strike)

Output (tons) 10,000 12,000 28,000 25,000 40,000 15,000

What is th M/R for the year 1994?









































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