- 15 Marks
FA – Nov 2013 – L1 – SB – Q6 – Accounting Concepts
Recording royalty and short-working transactions in the landlord's books.
Question
Fatai leased his quarry site to EML Limited to mine granite at a dead rent of N2,000,000 per annum. The royalty payable per metric tonne was agreed at N100. Short-workings could be recovered in the first four years of the lease only, while irrecoverable short-workings are regarded as a loss.
The output of the granite for the first five years was as follows:
| Year | Output (Metric Tonnes) |
|---|---|
| 2008 | 12,000 |
| 2009 | 15,000 |
| 2010 | 22,000 |
| 2011 | 26,000 |
| 2012 | 30,000 |
You are required to:
Record the above transactions in the landlord’s books for the first five years of the contract.
(15 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Accounting Entries, Landlord’s Books, Lease Agreements, Royalties, Short Workings
- Level: Level 1
- Topic: Accounting Concepts
- Series: NOV 2013
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