The installment method should be used if
A) collectibility is extremely uncertain
B) collectibility is not reasonably assured
C) there is no reliable basis for estimating the collectibility
D) there is significant uncertainty about the profitability of a new venture or product

Question

Quizplus · Accepted Answer

The installment method should be used when collectibility is not reasonably assured. This means that there is some uncertainty about whether or not the debtor will be able to make the required payments on time or in full. In this situation, the seller may choose to recognize revenue over time as the payments are received, rather than recognizing it all at once upfront. This can help reduce the risk of recognizing revenue that may never be collected.

The Installment Method Should Be Used If