Under Gaap installment revenue recognition method the percentage of profit recognised is determined by percentage of sales price received or ratio of profit to sales.
Thanks any help with this regard will be helpfull作者: mar350 时间: 2011-9-25 19:48
Suppose the total revenue for a project is 1000 and the estimated profit is 20% which is 200, and so far you've received 500 out of it then 100 should be your profit (20/100 * 500) using the installment revenue recognition method you mentioned.
Under cost recovery method when you are not reasonably sure about getting the revenue then the whole 500 would be used to cover the cost of 800. Unless the 800 of the cost is recovered, no profit shall be reported.
