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(Solved): Question Four i. A royalty contract typically includes an agreement on minimum rent. Explain the pu ...
Question Four i. A royalty contract typically includes an agreement on minimum rent. Explain the purpose and implication of the minimum rent in the agreement? \{5 marks\} ii. Discuss the implications of "substance over form" concept in Hire purchase accounting \{5 marks\}
Expert Answer
i. Minimum Rent: Usually, the royalty agreements contain a clause for the payment of a fixed minimum amount to the lessor every year as royalty—irrespective of the actual benefit to be taken by the lessee—simply in order to assure the lessor of a cer