In case of sub-lease royalty earned by the lessor is credited to

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Question

This question was previously asked in

UP TGT Commerce 2021 Official Paper

Answer 1

The Correct Answer is Royalty Receivable Account

Key PointsSub-Lease

Sometimes a lessee further leases the property to a third party, which is known as sub-lease.
For Example A leases a property from B and A further sub lease it to C. Then B is the owner of the property, A is the lessee as well as sub -lessor, and C is sub-lessee
In this case royalty earned by the lessor is credited to the Royalty Receivable Account.
For the lessor, royalty is ordinary business income.