Why was my royalty payment adjusted?

Why was my royalty payment adjusted?

Royalty accounts are subject to Prior Period Adjustments (PPAs). There are many factors that may result in a prior period adjustment, such as:

  1. Revised production statements from the property operator
  2. Revised plant statements from a plant operator or purchaser
  3. Corrected data received after an unexpected operational change (often due to a mechanical failure that interrupts normal operations or a major weather event)
  4. Revised pricing information from third parties
  5. Revised allocation statements or pricing information due to audit findings
  6. Accounting revisions
  7. Retroactive tax incentives provided by government authorities

Accounting adjustments may be identified several months or years after the original accounting for a given production month, and there may be multiple revisions over any period of time.

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