On the other hand, partial unemployment subject to a recovery assessment must be deferred and recorded as current assets on the balance sheet. In the event of TDS applicability (source deductible) under the Income Tax Act, the payment to the lessor is made after deduction of SDS at the applicable rate and the lessor is required to pay it to the central government credit. The amount of the licence is the gross amount of royalties (including TDS) charged to the profit and loss account. When rent is paid for the use of tangible assets such as construction equipment, machinery, etc., royalties are paid for the use of intangible assets or for the exercise of special rights such as patents, copyrights, mines, etc. It is clear from the above that licence applications should be accounted for as products. As a general rule, a licensing agreement contains another provision relating to the recovery of partial unemployment, i.e. the lessor grants the lessor the right to anticipate and encourage partial unemployment with the surplus or excess of royalties on the minimum rent in subsequent years. However, there may be cases where the number of goods produced or sold is small or relatively small. In such a case, the lessor would receive little or no royalties directly affecting the income from the lessor`s licence. Basic rent – Sometimes the tenant has to pay an additional fixed rent in addition to the minimum rent known as basic or basic rent.

This year again, the actual licensing fees are more than the minimum rent of Rs. 10,000 (Rs. 30,000 – Rs. 20,000) which is recovered against the partial unemployment balance of Rs. 13,000. Therefore, the non-reducible part of partial unemployment, i.e. Rs3,000 (Rs. 13,000 – Rs.10,000) should be transferred to P-L A/c because the maximum time for recovery of partial unemployment was four years.

In order to record bookings related to license accounts, daily registrations are recorded in the books of donors and donors. In the books of tenant newspaper entries, they are delivered in two different ways – without a minimum rental account and with a minimum rental account. Note: It should be noted that the royalties payable by the taker on the basis of actual production are lower in years 1, 2 and 5. But the tenant has to pay the highest amount during these years because of the low production. Such overpayment is a loss for the tenant. There may be cases of strike or lockout during the duration of the licence agreement. For example, the licensing agreement may provide for a provision for a proportional reduction in the minimum rent in the event of a strike or lockout. Thus, in addition to the information provided in the example above, both parties agreed that the minimum rent to be paid is 400,000 per year. In this case, the actual amount of the licence for each year is calculated on the basis of a graph as well as under: the surplus of the minimum rent through royalties is called “partial unemployment”.