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    student007's Avatar
    student007 Posts: 60, Reputation: 2
    Junior Member
    		  
    #1

    Oct 3, 2006, 05:22 PM
    Accounting for Royalties
    Let's say there's a private company owned 100% by the inventor of the product which the company sells. The company must pay the inventor royalties on each product sold. Let's say the company bought 1000 from the supplier and sold 200. So now there are 200 in royalties outstanding. How can I account for this? I mean, in a case situation, are there different options? (i.e. what would be best to have a conservative net income, or an aggressive one or for that matter one that follows stewardship)? Or is there just one option - expense them?
    priyanka20r's Avatar
    priyanka20r Posts: 1, Reputation: 1
    New Member
    		  
    #2

    Jan 5, 2011, 10:50 PM
    1, total cost of machiery-scarp value
    amount of depreciation= ------------------------------------
    number of estimated life

    160000-16000
    = ------------
    4

    144000
    = -------
    4

    = Rs.36000

    amount of depreciation
    Rate of depreciation = ------------------------ X 100
    total cost of machinery

    36000
    = -------- X 100
    160000


    = 22.5%
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