Page 179 - Accountancy_F5

Year Qnty Per Actual Minimum Short Short Transferred Royalty
in tonne royalty rent workings workings to statement Paid
tonnes (Recoupment) of P/L
TZS TZS TZS TZS TZS TZS
2020 200 30,000 6,000,000 10,000,000 4,000,000 4,000,000 - 10,000,000

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2021 300 30,000 9,000,000 10,000,000 1,000,000 5,000,000 - 10,000,000
2022 400 30,000 12,000,000 10,000,000 (2,000,000) 3,000,000 - 10,000,000

2023 300 30,000 9,000,000 10,000,000 1,000,000 2,000,000 2,000,000 10,000,000

2024 350 30,000 10,500,000 10,000,000 (500,000) 1,000,000 500,000 10,000,000
LANGUAGE EDITING
Exercise 6.1

(a) The following information relates to a lease agreement between Mr. Naseeb (lessee)
and Mr. Kibwana (lessor). The lease agreement gives the lessee right to recoup
short workings within the first five (5) years.
Actual royalty Minimum rent
Year
TZS TZS
2019 1,200,000 2,000,000

2020 1,800,000 2,000,000
2021 2,400,000 2,000,000

2022 3,600,000 2,000,000
2023 3,900,000 2,000,000

2024 4,500,000 2,000,000
Required: In each year, compute royalty paid, short workings and short workings
recouped.
(b) The Bagamoyo Ltd. granted a lease to Pwani Fisheries Ltd. to fish in the Bagamoyo
Coast on the basis of TZS 1,000,000 per tonne of fish subject to a minimum rent
of TZS 750,000,000. The output in five years was as follows:

Year 2020 2021 2022 2023 2024

Output of fish 500 750 1,000 750 875
(tonnes)
Required: Compute royalty, short workings, recoupment, transfers to statement of
profit or loss and amount receivable from lessee under the following cases:
(a) The lessee has the right to recoup the short workings during the first two years
of the lease and not afterwards.

Student’s Book Form Five
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