cma_Conceptual_Frame_Work_For_Financial_Reporting

Exp50000 collection on installment sale 100000

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Unformatted text preview: n on installment sale 100000 Required the amount of deferred gross profit At the time of sale Gross profit 250000 is deferred (500000 sales-250000 cost of sales) – the gross profit rate is 50% (250000/500000) The collection is 100000 recognized profit in 2003 100000*50%=50000 this will decrease the deferred revenue= 200000 (250000-50000) Cost recovery method: Cost recovery method is similar to installment sales method in that gross profit on the sale is deferred No profit is recognized until the cumulative receipt exceeds the cost of the asset sold. Example: HEGAS manufacturing sells inventory with a cost 25000$ to ALAN co for 36000$ with payment receivables 18000$ in 2001- 12000$ in 2002 -6000$ in 2003 e-mail:.acchouse_scada@yahool.com-0502265272 0105030092 : WWW.AHSCADA.COM022622173 022622168 1016448872 : 0124059666 034851600 034865655 : – % &'( ) ! , $- ./ : *+ 35 ! " # # $ : :, $- 4 Accounting Accounting House House www.jpspublished on www.jps-dir.com Cash collected Revenue Cost of goods sold Deferred gross profit Recognized gross profit Deferred gross profit (end of period 2002 12000 0 0 11000 5000 6000$ 2001 18000 36000 25000 11000 0 11000$ 2003 6000 0 0 6000 6000 0$ *$25000-$18000=$7000 of unrecovered cost at the end of 2001;$12000-$7000=$5000.the access of cash...
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