The cost recovery method is
A) used only when circumstances surrounding a sale are so uncertain that earlier recognition is impossible.
B) the most common method of accounting for real estate sales.
C) similar to percentage-of-completion accounting.
D) never acceptable under generally accepted accounting principles.

Question

Quizplus · Accepted Answer

The cost recovery method is only used when the circumstances surrounding a sale are so uncertain that earlier recognition of revenue is impossible. This method is used to recognize revenue only after the seller has recovered all of their costs associated with the sale, and any further revenue is recognized as a gain. This method is not commonly used and is only acceptable in certain situations under generally accepted accounting principles.

The Cost Recovery Method Is