Set up royalty agreements

Important

This content is archived and is not being updated. For the latest documentation, see Microsoft Dynamics 365 product documentation. For the latest release plans, see Dynamics 365 and Microsoft Power Platform release plans.

Applies To: Microsoft Dynamics AX 2012 R3

This topic explains how to define and set up royalty agreements. A royalty is a fee that one party (the licensee) pays to another party (the licensor) for the use of intellectual property, including logos or copyrights. For example, Fabrikam sells t-shirts that have a small logo on the sleeve. The logo is owned by Contoso. This means that Fabrikam, the licensee, must pay Contoso, the licensor, a royalty for use of the logo.

Prerequisite: Set up options for royalty payments

Before you set up royalty agreements, you must select options for how your company handles royalty payments. Use the following procedure to set up royalty options.

1. Click Accounts payable > Setup > Accounts payable parameters.

2. In the Accounts payable parameters form, in the left pane, click Broker and royalty.

3. If you calculate royalties on a weekly basis, in the Royalties field group, in the Starting day of week field, select the day of the week on which to calculate royalties.

4. In the Accrual journal name field, select the journal to which to post royalty accrual amounts when the royalty is approved.

5. In the Accrual account field, select the account to which to post interim royalty liabilities.

6. In the Expense account field, select the account to which to post interim royalty expenses.

7. In the Procurement category field, select the category for line items that include the processed royalty claims on vendor invoices.

Set up a royalty agreement

Use the following procedure to set up a royalty agreement.

1. Click Accounts payable > Common > Royalties > Royalty agreements.

2. In the Royalty agreements form, click Create a new record, and in the upper pane, on the Overview tab, enter the vendor and unit information for the royalty agreement.

3. Enter the following information for this agreement:

   1. In the Cumulate sales by field, select whether to cumulate royalties by invoice or by a time period, such as weekly or monthly.

   2. In the Taken from field, select whether the royalty value is taken from the net price, or gross price of the item.

   3. In the Accrual account and Expense account fields, select the accounts used for interim liability postings and interim expense postings, respectively.

   4. Verify that the correct currency is selected and then, if a royalty must be approved before accrual or payment, select the Approval required check box.

   5. In the Calculate by field, select whether the royalty break is based on the item quantity on the line item or the amount of the line item.

4. In the upper pane, on the Selection tab, click Add.

5. In the Item number field, select an item to add to the royalty agreement.

   Add more items as necessary.

6. In the lower pane, on the Lines tab, click Add line. The values that you entered on the Selection tab are shown.

7. In the lower pane, on the Royalty amounts tab, click Add line.

8. In the From value and To value fields, enter the lowest and highest price of the royalty item.

9. In the Value field, enter the royalty amount that your organization must pay for the item.

Validate a royalty agreement

A royalty agreement must be validated before it can be applied to a sales order. Use this procedure to validate a royalty agreement.

1. Click Accounts payable > Common > Royalties > Royalty agreements.

2. In the Royalty agreements form, select the agreement to validate, and then click Validation.

3. In the Validate royalty contract dialog box, in the Validated by field, select your worker identification number, and then click OK.

Category	Prerequisite
Configuration keys	Call center
Security roles	System administrator