undefined | unit 4 voyage accounts

UNIT 4

VOYAGE ACCOUNTS

Q1) Write note on Royalty.

A1) Royalty must be paid by the user to the owner of the property or to which the owner has special rights. Royalty agreements are created between the owner and the user of such property or right. When payments are made to purchase rights or assets that are treated as capital expenditures rather than royalties.

Payments made by the lessee for royalties are normal business expenses and are deducted from the royalties’ account. This is a nominal account and at the end of the fiscal year you need to transfer the balance of your royalty account to your regular trading and profit and loss accounts. Loyalties are sent strictly to the manufacturing or production account based on the production or production. If royalties are paid on a sales basis, it will be part of the selling cost.

Q2) What are the types of Royalty?

A2) There are the following types of royalties-

Copyright-Copyright provides legal rights to the author (of his book), the photographer (of his photographs), or any such type of intellectual work. The copyright royalties must be paid by the publisher (borrower) to the author (lender) or photographer of the book based on the sale by the publisher.

Mining royalties-Mine or quarry lessees pay mine or quarry lenders. This is usually based on production volume.

Patent royalties-Patent royalties are paid by the lessee to the lessor based on the production or production of each item.

Q3) AB Ltd. has acquired a mine lease based on Rs.5 per ton of coal procured, subject to a minimum rent of Rs.1,00,000 p.a. Tenants have the right to regain short-term work for the first four years of the lease, not thereafter. Suppose the year ends on December 31st of each year.

The four-year production was 9000, 13000, 25000, 27000 and 50000, respectively. Enter journals and ledger accounts in AB Ltd.’s books.

A3) Calculation of royalties, minimum rent, short-term work.

Year	Quantity in tonnes	Rate per tonne	Royalty	Minimum Rent	Short-workings
1	9000	5	45000	100000	65000
2	13000	5	65000	100000	45000
3	25000	5	125000	100000
4	27000	5	135000	100000
5	50000	5	250000	100000

Computation of Recoupment, Short-workings carried forward, Transferred to P&L Account

Year	Recoupment	Short-working carried forward	Transferred to P&L Account	Payment to Lessor
1		65000		100000
2		100000		100000
3	25000	75000		100000
4	35000		40000	100000
5				250000

Journal Entries Year: 1

Date	Particular		Amount (Dr.)	Amount (Cr.)
31 Dec	Royalty A/c	Dr.	45000
	Short-workings A/c	Dr.	65000
	To Lessor A/c			100000
	(Being payment due)
31 Dec	Lessor A/c	Dr.	100000
	To Bank A/c			100000
	(Being amount paid)
31 Dec	Profit and Loss A/c	Dr.	45000
	To Royalty A/c			45000
	(Being amount charged to relevant a/c)

Journal Entries Year 2

Date	Particular		Amount (Dr.)	Amount (Cr.)
31 Dec	Royalty A/c	Dr.	65000
	Short-workings A/c	Dr.	45000
	To Lessor A/c			100000
	(Being payment due)
31 Dec	Lessor A/c	Dr.	100000
	To Bank A/c			100000
	(Being amount paid)
31 Dec	Profit and Loss A/c	Dr.	65000
	To Royalty A/c			65000
	(Being amount charged to relevant a/c)

Journal Entries Year 3

Date	Particular		Amount (Dr.)	Amount (Cr.)
31 Dec	Royalty A/c	Dr.	125000
	To Short-workings A/c			25000
	To Lessor A/c			100000
	(Being payment due)
31 Dec	Lessor A/c	Dr.	100000
	To Bank A/c			100000
	(Being amount paid)
31 Dec	Profit and Loss A/c	Dr.	125000
	To Royalty A/c			125000
	(Being amount charged to relevant a/c)

Journal Entries Year 4

Date	Particular		Amount (Dr.)	Amount (Cr.)
31 Dec	Royalty A/c	Dr.	135000
	To Short-workings A/c			35000
	To Lessor A/c			100000
	(Being payment due)
31 Dec	Lessor A/c	Dr.	100000
	To Bank A/c			100000
	(Being amount paid)
31 Dec	Profit and Loss A/c	Dr.	135000
	To Royalty A/c			135000
	(Being amount charged to relevant a/c)
31 Dec	Profit and Loss A/c	Dr.	40000
	To short-working A/c			40000
	(Being amount charged to relevant a/c)

Journal Entries Year 5

Date	Particular		Amount (Dr.)	Amount (Cr.)
31 Dec	Royalty A/c	Dr.	250000
	To Lessor A/c			250000
	(Being payment due)
31 Dec	Lessor A/c	Dr.	250000
	To Bank A/c			250000
	(Being amount paid)
31 Dec	Profit and Loss A/c	Dr.	250000
	To Royalty A/c			250000
	(Being amount charged to relevant a/c)

Ledgers account in Lessee Books

Lessor A/c

Date	Particulars	Amount	Date	Particulars	Amount
Year1	To Bank a/c	100000	Year1	By Royalty a/c	45000
				By Short-workings	65000
		100000			100000
Year2	To Bank a/c	100000	Year2	By Royalty a/c	65000
				By Short-workings	45000
		100000			100000
Year3	To Bank a/c	100000	Year3	By Royalty a/c	100000
		100000			100000
Year4	To Bank a/c	100000	Year4	By Royalty a/c	100000
		100000			100000
Year5	To Bank a/c	250000	Year5	By Royalty a/c	250000
		250000			250000

Short-workings A/c

Date	Particulars	Amount	Date	Particulars	Amount
Year1	To Lessor a/c	65000	Year1	By balance c/d	65000
		65000			65000
Year2	To balance b/d	65000	Year2
	To Lessor a/c	45000		By balance c/d	100000
		100000			100000
Year3	To balance b/d	100000	Year3	By Royalty a/c	25000
				By balance c/d	75000
		100000			100000
Year4	To balance b/d	75000	Year4	By Royalty a/c	35000
				By P&L a/c	40000
		75000			75000

Royalty A/c

Date	Particulars	Amount	Date	Particulars	Amount
Year1	To Lessor	45000	Year1	By P&L	45000
		45000			45000
Year2	To Lessor	65000	Year2	By P&L	65000
		65000			65000
Year3	To Lessor	100000	Year3	By P&L	125000
	To Short-workings	25000
		125000			125000
Year4	To Lessor	100000	Year4	By P&L	135000
	To Short-workings	35000
		135000			135000
Year5	To Lessor	250000	Year5	By P&L	250000

Q4) X Ltd. had the right to publish and sell books for five years from Bharat. The minimum rent is £ 20000. Royalty is £ 5 per book. Bharat is X Ltd in the first four years. Recognized the right to regain short-term work to. The sales for 5 years are as follows.

Year	Books sold
1	2500
2	3000
3	4500
4	5000
5	6000

Calculate royalties’ payments and short-term work. In addition, we will give you the journals required for Bharat's books for 5 years. You also need to set up an X Ltd account. The book is closed on March 31st every year.

A4)

In Bharat's book

Date	Particulars		Amount (Dr.)	Amount (Cr.)
1st Year
31st Mar	X Ltd.’s A/c	Dr.	20000
	To Royalty receivable A/c			12500
	To Short-workings Allowable A/c			7500
	(Being royalty due from X Ltd. and short-workings allowed)
31st Mar	Bank A/c	Dr.	20000
	To X Ltd.’s A/c			20000
	(Being money received from X Ltd.)
31st Mar	Royalty receivable A/c	Dr.	12500
	To Profit &Loss A/c			12500
	(Being royalty received transferred to the Profit &Loss A/c)
2nd Year
31st Mar	X Ltd.’s A/c	Dr.	20000
	To Royalty receivable A/c			15000
	To Short-workings Allowable A/c			5000
	(Being royalty due from X Ltd. and short-workings allowed)
31st Mar	Bank A/c	Dr.	20000
	To X Ltd.’s A/c			20000
	(Being money received from X Ltd.)
31st Mar	Royalty receivable A/c	Dr.	15000
	To Profit &Loss A/c			15000
	(Being royalty received transferred to the Profit &Loss A/c)
3rd Year
31st Mar	X Ltd.’s A/c	Dr.	22500
	To Royalty receivable A/c			22500
	(Being royalty due from X Ltd.)
31st Mar	Short-workings Allowable A/c	Dr.	2500
	To X Ltd.’s A/c			2500
	(Being amount of short-workings recouped)
31st Mar	Bank A/c	Dr.	20000
	To X Ltd.’s A/c			20000
	(Being money received from X Ltd.)
31st Mar	Royalty receivable A/c	Dr.	22500
	To Profit &Loss A/c			22500
	(Being royalty received transferred to the Profit &Loss A/c)
4th Year
31st Mar	X Ltd’s A/c	Dr.	25000
	To Royalty receivable A/c			25000
	(Being royalty due from X Ltd.)
31st Mar	Short-workings Allowable A/c	Dr.	5000
	To X Ltd.’s A/c			5000
	(Being amount of short-workings recouped)
31st Mar	Bank A/c	Dr.	20000
	To X Ltd.’s A/c			20000
	(Being money received from X Ltd.)
31st Mar	Royalty receivable A/c	Dr.	25000
	To Profit &Loss A/c			25000
	(Being royalty received transferred to the Profit &Loss A/c)
5th Year
31st Mar	X Ltd.’s A/c	Dr.	30000
	To Royalty receivable A/c			30000
	(Being royalty due from X Ltd.)
31st Mar	Bank A/c	Dr.	30000
	To X Ltd.’s A/c			30000
	(Being money received from X Ltd.)
31st Mar	Royalty receivable A/c	Dr.	30000
	To Profit &Loss A/c			30000
	(Being royalty received transferred to the Profit &Loss A/c)
31st Mar	Short-workings Allowable A/c	Dr.	5000
	To Profit and Loss A/c			5000
	(Being the amount of short-workings lapsed)

X Ltd.’s A/c

Date	Particulars	Amount	Date	Particulars	Amount
1st Year			1st Year
31 Mar	To Royalty receivable A/c	12500	31 Mar	By Bank A/c	20000
31 Mar	To Short-workings Allowable A/c	7500

		20000			20000
2nd Year			2nd Year
31 Mar	To Royalty receivable A/c	15000	31 Mar	By Bank A/c	20000
31 Mar	To Short-workings Allowable A/c	5000

		20000			20000
3rd Year			3rd Year
31 Mar	To Royalty receivable A/c	22500	31 Mar	By Short-workings Allowable A/c	2500
			31 Mar	By Bank A/c	20000

		22500			22500
4th Year			4th Year
31 Mar	To Royalty receivable A/c	25000	31 Mar	By Short-workings Allowable A/c	5000
			31 Mar	By Bank A/c	20000

		25000			25000
5th Year			5th Year
31 Mar	To Royalty receivable A/c	30000	31 Mar	By Bank A/c	30000

		30000			30000

Working Notes:

Calculation of Royalty, Minimum Rent and Short-workings

Year	Books sold	Rate per book	Royalty	Minimum Rent	Short-workings
1	2500	5	12500	20000	7500
2	3000	5	15000	20000	5000
3	4500	5	22500	20000
4	5000	5	25000	20000
5	6000	5	30000	20000

Computation of Recoupment, Short-workings carried forward and transferred to profit and loss A/c

Year	Recoupment	Short-workings carried forward	Transferred to P&L A/c	Payment to Bharat
1		7500		20000
2		12500		20000
3	2500	10000		20000
4	5000	5000	5000	20000
5				30000

Q5) Bee Ltd. has acquired the right to publish and sell books from Smith for five years. The minimum rent was fixed at £ 20000. Royalty was fixed at £ 4 per book. Bee Ltd. reserves the right to regain what it worked for in the first four years. The sales for 5 years are displayed. Calculate royalties’ payments and short-term work.

Year	Books sold
1	3000
2	4000
3	6000
4	6500
5	8000

A5)

Calculation of Royalty, Minimum Rent and Short-workings

Year	Books sold	Rate per book	Royalty	Minimum Rent	Short-workings
1	3000	4	12000	20000	8000
2	4000	4	16000	20000	4000
3	6000	4	24000	20000
4	6500	4	26000	20000
5	8000	4	32000	20000

Computation of Recoupment, Short-workings carried forward and transferred to profit and loss A/c

Year	Recoupment	Short-workings carried forward	Transferred to P&L A/c	Payment to Smith
1		8000		20000
2		12000		20000
3	4000	8000		20000
4	6000	2000	2000	20000
5				32000

Q6) From the information below, open and prepare the required account for the books of M / s Black Diamond Limited.

The company leased a coal mine on January 1, 2010 with a minimum rent of Rs. 75,000.

Royalty rate @ rupees 1 /-per ton.

The right to recover the shortfall is limited to the first three years.

Production for the first four years of the lease was 40,000, 65,000, 1,05,000 and 90,000 tones, respectively.

A6)

Analytical Table

Year	Output (Tons)	Royalties @ Rs. 1 Per ton	Short workings	Surplus	Recoupment	Un Recoupable Short workings	Payable to Landlord
2010 2011 2012 2013	40,000 65,000 105,000 90,000	40,000 65,000 105,000 90,000	35,000 10,000 --	30,000 15,000	-- -- 30,000	15,000	75,000 75,000 75,000 90,000
	300,000	300,000	45,000	45,000	30,000	15,000	315,000

In the books of M/s Black Diamonds Ltd

Royalties Account

Date	Particulars	Amount	Date	Particulars	Amount
31-12-2010 31-12-2011 31-12-2012 31-12-2013	To Landlord A/c To Landlord A/c To Landlord A/c To Landlord A/c	40,000 ======= 65,000 ======= 105,000 ======= 90,000 =======	31-12-2010 31-12-2011 31-12-2012 31-12-2013	By Production A/c By Production A/c By Production A/c By Production A/c	40,000 ======= 65,000 ======= 105,000 ======= 90,000 =======

Landlord Account

Date	Particulars	Amount	Date	Particulars	Amount
31-12-2010 31-12-2011	To Bank A/c To Bank A/c	75,000 ---------- 75,000 ---------- 75,000 ---------- 75,000 ----------	31-12-2010 31-12-2011	By Royalties A/c By Short workings A/c By Royalties A/c By Short workings A/c	40,000 35,000 ---------- 75,000 ---------- 65,000 10,000 ---------- 75,000 ----------
31-12-2012 31-12-2012 31-12-2013	To Short workings A/c To Bank A/c To Bank A/c	30,000 75,000 ---------- 105,000 ---------- 90,000 ---------- 90,000 ----------	31-12-2012 31-12-2013	By Royalties A/c By Royalties A/c	105,000 ---------- 105,000 ---------- 90,000 ---------- 90,000 ----------

Q7) The M / s Hyderabad publication printed a book on Java at the lowest rent for Rs. 1,000,000 /-Annual royalties are paid in @ rupees. 20 books sold per book. In the first year of publication, Hyderabad publications sold 75,000 books, and in the second year, the number of books sold decreased to 45,000. The amount of royalties will be paid as follows-

Minimum Rent	Royalty Payable
Ist Year 75,000 Books X Rs. 20 per book = Rs. 1,5,00,000	1,0,00,000	Rs. 1,5,00,000
IInd Year 45,000 Books X Rs. 20 per book = Rs. 9,00,000	1,0,00,000	Rs. 1,0,00,000

A7)

Date	Particulars	Amount	Date	Particulars	Amount
31-12-2010 01-01-2011 01-01-2012	To Landlord A/c To Balance b/d To Landlord A/c To Balance b/d	35,000 ---------- 35,000 ---------- 35,000 10,000 ---------- 45,000 ---------- 45,000 ---------- 45,000 ----------	31-12-2010 31-12-2011 31-12-2012 31-12-2010	By Balance C/d By Balance C/d By Landlord A/c By Profit & Loss A/c	35,000 ---------- 35,000 ---------- 45,000 ---------- 45,000 ---------- 30,000 15,000 ---------- 45,000 --------

Short working

The difference between the minimum rent and the actual royalty is known as underwork, where royalties are paid based on the minimum rent due to a shortage of production or sales. For example, if the calculated royalty is Rs. According to the sale of the book based on the above example is 900,000 /-, but the royalty paid is Rs. The minimum rent is 1000,000 and short-term work is rupees. 100,000 (Rs. 1,000,000–Rs. 9,00,000).

Q8) What are the different methods of shipping?

A8) Below are the different cost methods for ships-

Brokerage Fees-The brokerage fees are calculated based on the fare including the primage and paid to the charter agent. Address fees are paid to brokers for procuring cargo from various parties.

Insurance-Proportional premiums may be deducted from your voyage account. For example, if your insurance is one year and your voyage trip is three months, your premium will be deducted from your voyage account at the 14th rate.

Stores-Stores purchased for voyages are debited from the voyage account on a consumption basis. That is, start inventory + purchase-end inventory.

Depreciation-Vessel depreciation is charged from the voyage account as a percentage of the voyage period.

Bunker Costs-The costs of water, coal, diesel, fuel, etc. used for voyage purposes are called bunker costs and may be debited from the voyage account.

Port Fees-Port authorities charge a fee to allow a ship to use the port for loading and unloading cargo. This fee will be deducted from your voyage account.

Cargo Fees-Loading and unloading of cargo, called cargo handling fees, must be deducted from the voyage account

During the voyage

At the end of the fiscal year, when the voyage is not completed and is still in progress, the following accounting is required-

Received freight

The total cargo received will be credited to the voyage account and any incomplete voyage reserves will be deducted from the voyage account. In proportion to the incomplete journey, preparations for an ongoing voyage are created.

Expenses

To complete the concept of matching, income and expenses associated with incomplete voyages may be carried forward to the next fiscal year in each account. The allowance for earned income should be debited from the voyage account, and the allowance for expenses should also be credited to the voyage account.

Q9) Draw the Performa of Voyage Account.

A9) Specimen of Voyage Account

Voyage Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Bunker cost	..	By Freight:
To Port Charges	..	Outward
To Brokerage or address	..	Inward	..
Commission		By Primage:
[% on Freight + Primage]		Outward
To Depreciation	..	Inward	..
To Store Consumed	..	By Passage Money	..
To Stevedoring Charges To Insurance of freight To Harbour charges To Other expense (if any) To Manager’s commission To Carry forward of income on incomplete journey To Net Profit Transfer to Profit and loss account (Balancing Figure)	.. .. .. .. .. .. … ………	By Stores on hand (if any) By other income received (if any) By Carry forward of expense on incomplete journey By Net Loss Transfer to Profit and loss account (Balancing Figure)

Q10) What all important points should be consider while estimating inventory?

A10) Here are some important points to consider when estimating inventory:

Gross Profit

Gross profit is calculated by subtracting sales from cost of sales. To find out last year's gross profit, you need to refer to last year's "Trading" account.

Memorandum of Understanding Trading Account (current year)

In the event of a fire, you will need a memorandum trading account to find the value of your estimated stock. It is created with the help of last year's gross margin, opening inventory, purchases, sales, and direct expenses.

The value of the collected shares

The value of the shares calculated in step 2 is reduced by the value of the collected shares to reach the value of the claim.

Other important points

If the stock is not valued at cost, it is first valued at the cost of last year's trading account and then at this year's memorandum account. For example, given an inventory of Rs. 80,750 is valued at 85% of last year's cost, first last year as

80,750

________ =95,000

85×100 then this year's memorandum transaction account.

Sample costs or stock withdrawals given free of charge by the company owner or partner for personal use must be adjusted in last year's trading account and this year's memorandum trading account.

If the gross profit for the last few years is shown, then the average gross profit should be used to determine the gross profit for the current year. However, if a clear upward trend in gross profit or a downward trend in gross profit is confirmed, it is necessary to apply a weighted average gross profit or a reasonable upward trend or downward trend to determine the gross profit for the current year. There is.

To know the gross profit of normal sales, you need to exclude the unsold sales from this year's sales. Similarly, poor-selling items need to be removed from the start and end inventory of the last few years in order to set up a trading account for this year.

Average clause

The average clause applies to find the value of a claim where the value of the shares on the fire day is higher than the value of the insured's shares. The average clause is applied by insurance companies to prevent under-insurance of stocks or other assets.

Q11) A fire broke out at the Style India office on April 1, 2014, destroying most of its inventory. Please check your insurance claim from the following:

Particulars	Amount (Year 2013)	Amount (01 Jan to 31st March 2014)
Sale	2,500,000	750,000
Purchases	1,800,000	350,000
Opening Stock (01-01-2013)	270000
Closing Stock (31-12-2013)	498,750
Direct Expenses (Freight & wages)	150,000	30,000

Inventories as of January 1, 2013, 10% less value in cost.

Inventory as of December 31, 2013 will be 5% higher in cost.

The value of the recovered stock Rs. 45,000.

The insurance policy (for fire) was for rupees. 300,000.

Here, the average clause applies because the value of the insurance policy (Rs.300,000) is less than the value of the stock on the fire day (Rs.322,500).

A11)

Trading Account of M/s Style India

(For the year ending on 31st December, 2013)

Particulars	Amount	Particulars	Amount
To Opening Stock {270,00090×100}{270,00090×100} To Purchases To Direct Expenses To Gross Profit (29%)	300,000 1,800,000 150,000 725,000	By Sales By Stock=500,000105×100ByStock=500,000105×100	2,500,000 475,000
	2,975,000		2,975,000

Memorandum Trading Account of M/s Style India

(Up to 01-4-2014)

Particulars	Amount	Particulars	Amount
To Opening Stock To Purchases To Direct Expenses To Gross Profit (29% of 750,000)	475,000 350,000 30,000 217,500	By Sales By Stock (Balancing Figure)	750,000 322,500
	1,072,500		1,072,500

Value of Stock= Rs. 322,500

Less: Stock Salvage= Rs.45,000

Q12) What are the important terms used in the profit loss policy?

A12) The following are important terms used in the profit loss policy.

Insured Full-time Expenses-Staff Salaries, Rents and Taxes, Wages for Skilled Workers, Auditor Expenses, Director Expenses, Advertising Expenses, Travel Expenses, Corporate Bond Interest, and Unspecified Expenses (Specific Expenses) 5% or less) The price that must be stated on the policy form when purchasing the policy (so that all charges are guaranteed).

Sales-Sales include sold goods or services for which an amount is paid. You also need to get insurance.

Annual Sales-Sales for the last 12 months immediately before the fire date.

Standard Sales-Standard sales means sales for the period corresponding to the compensation period of the previous fiscal year. You also need to make adjustments to note trends in the fiscal year in which the incident occurred.

Gross Profit-Calculated as

Gross Profit = Net Profit + Insured Continuing Expenses

Net Income-To Calculate Net Income-You need to adjust income (excluding tax), insured continuation costs, other costs, depreciation, and other provisions of that type.

Compensation period-Up to 12 months (from the date of damage) where damage affects the outcome of the business. The insured chooses the coverage period.

Claim calculation

To calculate your claim for loss of profits caused by business disruption, you need to perform the following steps:

Short Sale-A short sale means a loss on sale due to a fire and subsequent business disruption. The difference between standard sales and actual sales during the compensation period is called a short sale. This is shown in the following example.

Q13) Calculate your short sale according to the details below-

Date of Fire occurs	01-06-2013
Period of dislocation of business	4 months
Standard Sale	500,00
Increased trend	15%
Actual Sale	300,000

A13)

Computation of Short Sale

Standard turnover (Rs. 50,000 + 15%)(A)	575,000
Less: Actual Sale(B)	300,000
Short Sale(A-B)	275,000

Increased Labor Costs-Increased labor costs mean certain additional costs that the insured must incur to keep the business operational during the compensation period.

Cost Savings-Fire cost savings are deducted from the amount calculated above.

Average Clause-If the value of the insurance amount is less than the value of the insurance covered by the insurance policy, the average clause will be applied as it applies to equity insurance (above).

Q14) Write the Accounting Entries of Insurance.

A14)

In case of loss of stock

Insurance company A/cDr

To Stock Damaged A/c

To Stock Destroyed A/c

(Being Claim admitted for stock destroyed and stock damaged)

Stock destroyed A/cDr

Stock Damaged A/cDr

To Trading A/c

(Being actual cost of stock destroyed and stock damaged to trading account)

Bank A/cDr

To Stock Damaged A/c

(Being realization made on sale of damaged Stock)

Note − Difference of stock destroyed account and damaged account will be transferred to Profit & Loss account)

In case of loss of Profit

Insurance company A/cDr

To Profit & Loss A/cDr

To Profit & Loss Suspense A/c

(Being Loss of profit for next year)

Bank A/cDr

To Insurance Company A/c

Q15) Define Recovery of short work.

A15) Contracts between lessors and lessees under royalty accounting typically provide for provisions. This provision allows you to carry forward a short task to adjust the same thing in the future.

Therefore, in the following year, Short Workings will be adjusted for excess royalties. Such a process of adjusting short-term working capital is known as short-term working capital recovery.

In other words, the royalty contract collection clause provides the borrower with the right to recover any excess payments the borrower has made to the lessor in order to comply with the minimum rent clause of the previous year.

In addition, the contract has a fixed term. Such a period defines the number of years a lessee can recover or recover short-term work. This period may be fixed or variable.

If the lessee fails to recover the short-term work within the specified time, the short-term work will expire and will be debited on the income statement for the period in which the collection has elapsed

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