Question

Royalty earned by the lessee is credited to​

Answer 1

Answer:

Royalty is the sum payable by the lessee to the lessor for the use of rights vested in the lessor. ... For the lessor, royalty is ordinary business income. Royalty received on the basis of output is credited to Trading or Manufacturing A/c. Whereas, royalty received on the basis of sales is credited to Profit & Loss A/c.

Explanation:

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Answer 2

Royalty earned by the lessee is credited to​ the royalty receivables account.

• A royalty payment is a payment made by one party to another that owns a particular asset, for the right to ongoing use of that asset.
• A lessee is a person who holds the lease of a property.
• A royalty receivables account is a nominal account prepared to record the transactions relating to the royalties of a business. The balance of the Royalty account needs to be transferred to the normal Trading and Profit & Loss account.
• Royalties earned are an income and thus, following the golden rules of accounting, are supposed to be credited.
• If payment had been made by the lessee then it would have been debited to the royalty account.
• Thus, royalty earned by the lessee is credited to​ the royalty receivables account.

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