Question

what do you mean by short working balance

Answer 1

Short working is that amount by which the minimum rent exceeds actual royalty. in other words, whenever the minimum rent is more than the actual royalty, the difference is called short working or redeemable dead rent. Short working is also called 'royalty suspense' by lessor.

Answer 2

Short working balance:

• Short-working is defined as the difference between Minimum Rent and real royalties.
• As a result, only when the real royalty is less than the Minimum Rent will the issue of short-working occur.
• Short-workings that can be recouped will display as a current asset on the Balance Sheet's assets side.
• A second clause about the recoupment of short-working is usually included in a royalty agreement, i.e., the lessor allows the lessee to carry forward and set off the short-working against the excess or surplus of royalties above the Minimum Rent in later years.