ROYALTY AND TECHNICAL KNOW-HOW FEE

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....eals with the principles and methods of classification, measurement and assignment of the amount of Royalty and Technical Knowhow Fee, for determination of the cost of product or service, and their presentation and disclosure in cost statements. 2. Objective The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the amount of Royalty and Technical Know-how Fee with reasonable accuracy. 3. Scope This standard should be applied to cost statements, which require classification, measurement, assignment, presentation and disclosure of the amount of Royalty and Technical Know-how Fee including those requiring attestation. 4. Definitions The following terms are being use....

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....eaning as in the Accounting Standards notified by the Central Government under the Companies (Accounting Standards) Rules,2006. 4.5 Technical service fee: Technical service fee is any consideration payable to provider of technical or managerial services. 5. Principles of Measurement: 5.1 Royalty and Technical Know-how Fee paid or incurred in lump-sum or which are in the nature of 'one - time' payment, shall be amortised on the basis of the estimated output or benefit to be derived from the related asset. Examples: Amortisation of the amount of Royalty or Technical Know-how fee paid for which the benefit is ensued in the current or future periods shall be determined based on the production / service volumes esti....

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.....2 The amount of Royalty fee paid for mining rights shall form part of the cost of material. 6.3 The amount of Royalty and Technical Know-how fee shall be assigned on the nature/ purpose of such fee. The amount of royalty and technical know-how fee related to product or process know how shall be treated as cost of production; if it is related to trademarks or brands shall be treated as cost of sales. 7. Presentation 7.1 The amount Royalty and Technical Know-how fee shall be presented as a separate cost head with suitable classification. 8. Disclosures 8.1 The cost statements shall disclose the following: 1. The basis of distribution of the amount Royalty and Technical Know-how fee to the co....