Revenue Recognition 18 - 717. The installment-sales method defers only the gross profit instead of both the sales price and cost of goods sold. 18. Deferred gross profit is generally treated as an unearned revenue and classified as a current liability. 19. Under the cost-recovery method, a company recognizes no revenue or profit until cash payments by the buyer exceed the cost of the merchandise sold. 20. Companies recognize profit under the cost-recovery method only when cash collections exceed the total cost of the goods sold.