Page 202 - Accountancy_F5

Year Asha Ltd. (tonnes) Prisca Ltd. (tonnes)
2020 220 nil

2021 240 120
2022 300 160

2023 320 190
FOR ONLINE READING ONLY
Required:
(a) Prepare the necessary journal entries in the books of Asha Ltd.
LANGUAGE EDITING
(b) Prepare ledger accounts in the books of Asha Ltd.
LANGUAGE EDITING
Chapter summary
The chapter has offered a comprehensive exploration of accounting for royalties,
beginning with a definition of royalties as regular payments from a lessee to a lessor
based on resource usage, such as patents or copyrights. It has delved into the accounting
treatment for both lessors and lessees, where royalties are recognised as income for
the lessor and expenses for the lessee. The discussion has been extended to scenarios
involving minimum rent requirements, providing clarity on how such provisions
influence accounting records. Throughout the chapter various accounting principles
and their application in recording royalties have been elucidated by ensuring a thorough
understanding of their impact on financial statements.
To reinforce comprehension, the chapter has included numerous examples and learning
aids such as activities, exercises, and revision questions. These practical applications
enable students to grasp the concepts and principles of royalty accounting and apply
them in real-world scenarios. By providing a holistic approach to learning, the chapter
equips students with the necessary knowledge and skills to effectively navigate
the complexities of royalty accounting, facilitating their ability to prepare accurate
accounting records and financial statements reflective of business operations.

Student’s Book Form Five
189

23/06/2024 17:35
ACCOUNTANCY_DUMMY_23 JUNE.indd 189
ACCOUNTANCY_DUMMY_23 JUNE.indd 189 23/06/2024 17:35