Question

When the Short workings is irrecoverable
by lessee than it is treated as​

Answer 1

When the Short workings is irrecoverable  by lessee than it is treated in the profit and loss account.

• Short Working Capital is typically known as quick working recovery.  
• In the Royalty Arrangement, the recovery clause confers on the lessee the right to recover the excess payment provided to the lessor by the lessee in order to comply with the minimum rent clause in previous years.
• Short-term work that is not retrieved during the specified time should be considered as irrecoverable and should therefore be transferred to the Profit and Loss Account of the year in which the identical time has expired.

• The journal entry for the same is -

Trading/Profit and Loss/Manufacturing/Production A/c Dr.  

To short-working A/c

(Being the amount charged to relevant account)

Answer 2

Explanation:

The term lessee is used to define a person who intends to use the asset or property of another person or company and enters into an agreement with the person of paying some royalty or other terms.

Now according to the scenario given, if there are some short workings identified and the lessee is not able to recover them in the decided amount of time, than these are shifted to profit and loss account