Revenue Recognition Cascade Logging Company hired Dmitri Construction Company to build a new bridge across the Logan River. The bridge would extend a logging road into a new stand of timber. The contract called for a payment of $11 million on completion of the bridge. Work was begun in 20X0 and completed in 20X2. Total costs were:

20X0 20X1 20X2 Total $3 million 3 million 4 million $10 million 1. Suppose the accountant for Dmitri Construction Company judged that Cascade Logging might not be able to pay the $11 million. How much revenue would you recognize each year? 2. Suppose Cascade Logging is a subsidiary of a major wood products company. Therefore, receipt of payment on the contract is reasonably certain. How much revenue would you recog- nize each year?