Accounting entry for royalties
1. Where the enterprise provides the franchise to other units for use and obtains corresponding income:
Debit: accounts receivable, etc.
Loan: income from main business
Taxes payable-VAT payable (output tax)
2. If the enterprise uses the franchise:
Borrow: management fee-service fee, etc.
Loans: accounts payable, etc.
What is royalty?
Royalty refers to the fees paid for the use of patents, trademarks, copyrights or similar exclusive rights owned by other economic units. It is a kind of payment as property income, and it does not belong to the payment of commodity management. The expenses incurred in using the exclusive assets of other units can only be made up by the property income obtained from using the assets. However, the expenses incurred in manufacturing proprietary products and using patented methods or trademarks include technical or management services, so they should be registered as the production expenses of products. The use of exclusive rights is limited, and enterprises should use these economic rights within the scope permitted by the exclusive owner. If the scope and time limit are exceeded, the user will be punished.
What is the management fee?
Management expenses refer to the expenses incurred by the administrative department of an enterprise for organizing and managing production and business activities. Specific items include: company funds, trade union funds, unemployment insurance premiums, labor insurance premiums, directors' dues, agency fees, consulting fees, attorney fees, business entertainment expenses, office expenses, travel expenses, post and telecommunications expenses, greening expenses, manager's salary and welfare expenses, etc. Refers to the expenses incurred by the board of directors and the administrative department in the operation and management of the enterprise.