Cost Recovery Method

Knowledge Center





Description of Cost Recovery Method. Explanation.

 

Cost Recovery Method

Definition Cost Recovery Method. Description


The Cost Recovery Method is one of several Revenue Recognition approaches under U.S. GAAP, in which revenue is recognized subsequently to the sale.


When collections on installment sales occur over an extended period and no reasonable basis for estimating collectability exists, U.S. GAAP allows companies to use the cost recovery method for recognizing profits on such sales.


Under this method, no profit is recognized until cash collections from the buyer exceed the seller's cost of goods sold. After the cost of the merchandise has been recovered, any cash collected in excess of this amount is recorded as recognized gross profit in the seller's income statement.


For example, if a company sold a machine worth $20,000 for $30,000, it can start recognizing profit only after the buyer has paid more than $20,000.


Special Interest Group - Cost Recovery Method


Special Interest Group (6 members)


Forum - Cost Recovery Method  

Discussions about Cost Recovery Method.


Hot Quotes on Cost Recovery. Quotations
Hi, do you know of a remarkable, humorous quote by a famous (...)
 
 
 
 

Best Practices - Cost Recovery Method

Here you find the most valuable discussions from the past.



Expert Tips - Cost Recovery Method

Here you will find advices by experts.



Resources - Cost Recovery Method

Here you find powerpoint presentations, micro-learning videos and further information sources.


Special Interest Group Leader

You here? Sign up for free


 
 

Return to Management Hub: Finance & Investing


More on Management  |  Return to Management Dictionary  | 

 

This ends our Cost Recovery Method summary and forum.



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2019 12manage - The Executive Fast Track. V15.2 - Last updated: 5-12-2019. All names of their owners.