Expert: Ed McFarland - 3/8/2006

Question
Hello - I'm doing the accounting for a small publishing company that has contracts with authors that gives our company the right to publish the books.  The rights for each book are listed on our balance sheet at the estimated market value.   I'm trying to figure out the offset (credit) account for this asset.   We pay royalties to authors on sales as they occur, but there are no other obligations or liabilities.  I believe the offset goes to equity?   What account title?   Thank you very much!  Peggy

Answer
The asset is the book's value and over time it depreciates.

I'm assuming that the book's value is set independently of any royalties due. It is an expense to the profit and loss statement, not to equity. I'd look to credit a payroll type account.

Good luck