Mamatha (ACS) (45 Points)
17 February 2010Dear All,
An Indian company having JV collaboration with a foreign company, and it imports the materials from that JV partner , As per Technical License Agreement royalty is payable on cost of materials imported. Is this term of agreement valid, can royelty paid on cost of materials instead of sale of finished goods? and please let me know method of calculating the royalty.
Thanks & Regards,
Mamatha
kumar
(Dy Mgr finance)
(24 Points)
Replied 27 February 2010
General concept
Royalty calculation
Total sales value for Royalty applicatble products
Less Sales Return for Royalty applicatble products
Less Discount charges for Royalty applicatble products
Less Cost of Standard Bought out items ( If agreement mentioned)
Less Landed cost of Imported components (including procured from JV Parter)
= Net value for Royalty
Royalty = x% of Net of Value for Royalty
(x% = as per aggreement)
Kumar
CAclubindia
