The Solvane laboratory grants a manufacturer a five-year licence over a formulation patent, analysed as a right to use (conclusion given by the case). The licence period starts on 1 March 20X1, the date from which the manufacturer can exploit the patent. The consideration comprises a fixed amount of 200,000, payable on signature, and a royalty of 3 % of the sales of products manufactured under the licence. The manufacturer's sales reach 600,000 in 20X1 and are estimated at 4,000,000 over the following years. Determine the royalty revenue and the total revenue recognised by Solvane in 20X1.
- Fixed licence amount
- 200,000
- Sales-based royalty rate
- 3 %
- Manufacturer's sales in 20X1
- 600,000
- Estimated sales of the following years
- 4,000,000