• Tesla, a renowned electric vehicle manufacturer, has entered into a five-year service contract with a client.
• The contract, valued at $50,000,000, involves an upfront payment of $10,000,000.
• Revenue recognition is based on the cost incurred in providing the service.
• In the first year, Tesla incurred costs equivalent to 30% of the total contract value. Calculate the revenue recognized for the first year using the cost principle.