The installment method can be used for which of the following sales with payments being made in the year following the year of sale?
A) A department store's credit card sales.
B) An individual's sale of common stock in a family owned business.
C) An individual's sale of General Electric common.
D) Depreciable equipment sold for less than its original cost.
E) All of the above.

Question

Quizplus · Accepted Answer

The installment method can be used for the sale of assets in which payments are made in the year following the year of sale, so option B is correct. Options A and C are not correct because they both refer to sales in which the payment is made immediately (in the case of a department store credit card sale, the payment is due at the end of the billing period, and in the case of a sale of General Electric common stock, the payment is made on the day of the trade). Option D might be confusing, but the installment method cannot be used for sales of depreciable equipment sold for less than its original cost because the amount received each year cannot be less than the annual depreciation expense.

The Installment Method Can Be Used for Which of the Following