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Hello mam,
Can you please explain to me how is it appropriate to recognize the royalties as assets what exactly is happening here im confused
They are just payments in advance – so prepayments. In principle, it doesn’t matter what an advance payment is for – goods or services – whoever pays a deposit (it doesn’t matter what it is called) will consider it an asset (rather than expense) because they have a contractual right to something in return.
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