This is a typical royalty account, a brick-yard having leased a portion of certain property for the purpose of working a clay bed thereon, paying as rental a specified royalty on every thousand bricks burned. Monthly statements have been submitted showing the brick manufactured, and these, checked against the brick-yard "inventories" and "sales" records, are found to be correct.

As the working of this clay bed resulted in several large excavations, the land worked over was rendered useless for any other purpose. The royalties were therefore credited to the property in question, thus reducing its "cost" and providing for an increased profit when the salable part should be disposed of. If the entire tract had been leased, such royalties would have been credited in the above manner until they equalled the book value of the land, and all amounts in excess of that would be carried to Profits account.