Difference between rent and royalty according to basis of calculation ...
Rent:
Rent refers to the payment made by a tenant to a landlord in exchange for the use and occupancy of a property. It is a form of compensation for the temporary use of someone else's property or asset.
Calculation basis:
The calculation of rent is typically based on the following factors:
1. Time: Rent is usually calculated on a monthly basis, but it can also be calculated on a weekly, daily, or annual basis depending on the terms of the lease agreement.
2. Fixed amount: In some cases, rent may be a fixed amount that is agreed upon between the tenant and the landlord. This is common for residential properties where a fixed monthly rent is charged.
3. Market rate: Commercial properties are often rented based on the prevailing market rates. The rent amount may be determined by factors such as location, size, amenities, and demand for the property. The market rate is typically determined through negotiations between the landlord and the tenant.
4. Percentage of sales: In certain cases, especially in retail businesses, rent may be calculated as a percentage of the tenant's sales. This is known as a percentage lease and is commonly used in shopping malls or commercial complexes. The tenant pays a base rent plus a percentage of their sales as rent.
Royalty:
Royalty refers to the payment made by a licensee to a licensor for the use of intellectual property or other intangible assets. It is a form of compensation for the rights granted to the licensee to use and exploit the intellectual property.
Calculation basis:
The calculation of royalty is typically based on the following factors:
1. Percentage of revenue: Royalty payments are often calculated as a percentage of the licensee's revenue generated from the use of the licensed intellectual property. The agreed-upon percentage may vary depending on the industry, the nature of the intellectual property, and the bargaining power of the parties involved.
2. Fixed amount: In some cases, royalty payments may be a fixed amount that is agreed upon between the licensor and the licensee. This is commonly seen in licensing agreements for software, where a fixed fee is paid for the use of the software irrespective of the revenue generated.
3. Unit-based: Royalty payments can also be calculated based on the number of units sold or produced by the licensee. This is commonly used in industries such as publishing, music, and manufacturing, where the licensor receives a royalty for each unit sold or produced.
4. Minimum guarantee: In certain licensing agreements, there may be a minimum guarantee clause that ensures the licensor receives a minimum amount of royalty regardless of the actual revenue or sales generated by the licensee. This provides a level of financial security to the licensor.
In summary, while both rent and royalty involve the payment for the use of assets, their calculation basis differs. Rent is typically based on factors such as time, fixed amounts, market rates, or percentage of sales, while royalty is calculated based on factors such as percentage of revenue, fixed amounts, unit-based calculations, or minimum guarantees.
Difference between rent and royalty according to basis of calculation ...
Rent--rent is the consideration payable for the use of some TANGIBLE ASSETS
Royalty-- royalty is the consideration payable for use of SPECIAL RIGHT in both tangible and intangible assets
aslo ,rent is mostly payable according to TIME as per day, per week , per month, etc. but payment of royalty depends upon YIELD AND PRODUCTION etc