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3#
发表于 2011-7-11 17:39
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to expand...
the installment sales method is when you are collecting cash through more than 1 period and need to allocate profits accordingly. it is used if you cannot determine the actual amount of collections in advance whereas with the % completion, you assume that you will collect and know when you will collect (so you recognize revenue as you do the work and incur costs).
this is why for the installment method you get the gross profit % for each year, then as you collect cash from sales done in said period, you recognize profit based on that percentage.
for the % completion, you just multiply the expected revenue times the proportion of cost that was completed in that period, so you recognize the profit right away. |
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