When Would A Company Use The Installment Sales Method Of Revenue Recognition?

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When Would A Company Use The Installment Sales Method Of Revenue Recognition?

nt sales method of revenue recognition?
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The installment method of revenue recognition is used when the realizability criterion of revenue recognition is not met. In other words, there is significant uncertainty that the receivable will be collected. Until cash is collected (realizability is therefore assured for the amount collected), no gross profit is recognized. The cost-recovery method, which is even more conservative, may also be used in this situation.

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