Question:
How does a company report deferred gross profit resulting from the use of the installment sales method in
its balance sheet?
Answer:
Deferred gross profit is a contra installment receivable account. The balance in this account is subtracted
from gross installment receivables to arrive at installment receivables, net. The net amount of the
receivables represents the portion of remaining payments that represent cost recovery.
How does a company report deferred gross profit resulting from the use of the installment sales method in
its balance sheet?
Answer:
Deferred gross profit is a contra installment receivable account. The balance in this account is subtracted
from gross installment receivables to arrive at installment receivables, net. The net amount of the
receivables represents the portion of remaining payments that represent cost recovery.
