Institute of Chartered Financial Analysts of India (ICFAI) University 2007 Certification Finance Financial Accounting – I (111) : - Question Paper

(e)
Rs.5,60,000.
(2 marks)
< ans >
43.
Under a royalty agreement, if the landlord receives royalties from the lessee for the assignment of a patent for threeyears, the royalties received should be reported as revenue
(a)
Evenly over the life of the royalty agreement
(b)
At the date of entering into the agreement
(c)
During the period of true receipt
(d)
As per the terms of agreement
(e)
After completion of 3 years.
(1 mark)
< ans >
44.
If the shortworking amount is not recouped due to expiry of the term of recoupment, it should be debited to
(a)
Minimum rent account
(b)
Landlord account
(c)
Royalty account
(d)
Profit & loss account
(e)
Bank account.
(1 mark)
< ans >
45.
Q Ltd. leases a limestone quarry to P for 10 years on a minimum rent of Rs.25,000 and the short working recoverablein two years. If the rate of royalty is Re.1 per tonne and the outputs for the 1st year and 2nd year were 20,000 tonnesand 35,000 tonnes respectively, the royalty paid by P in the 2nd year is
(a)
Rs.35,000
(b)
Rs.25,000
(c)
Rs.30,000
(d)
Rs.27,500
(e)
Rs.20,000.
(2 marks)
< ans >
46.
The Ghat Collieries Ltd. leased a mine from Central Collieries Ltd. on the subsequent terms:
Royalty of Rs.60 per ton.
Minimum rent of Rs.80,000 per annum.
Short workings: Lessee has power to recoup every year’s short workings out of the royalties of next three years.
It was also agreed that in the event of a strike, the short workings, if any, would stand decreased proportionately to time truly worked.
The annual output for the past 6 years was as follows:
Year
Output in tonnes
2000-2001
600
2001-2002
1,250
2002-2003
1,500
2003-2004
1,800
2004-2005 (Strike for three months)
800
2005-2006
1,600
The amount of short workings recouped, during the year 2005-2006 was
(a)
Rs.12,000
(b)
Rs.16,000
(c)
Rs. 8,000
(d)
Rs.17,000
(e)
Nil.
(2 marks)
< ans >
47.
Royalty earned by the sub-lessor is credited to
(a)
Sub-lessee’s account
(b)
Profit and loss account
(c)
Royalty receivable account
(d)
Royalty payable account
(e)
Landlord’s account.
(1 mark)
< ans >
48.
The writer of a copyright allows a publisher to use the stated right on the condition that the Publisher shall pay a royaltyof Rs.10 per book printed subject to a minimum rent of Rs.15,000 per year. If the books printed are 1,250 during theyear 2005-06, the amount of short workings was

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