• Uber Technologies has signed a four-year contract with a client for ride-hailing services.
• The contract involves an upfront payment of $12,000,000 and has a total value of $40,000,000.
• Revenue recognition is based on the cost incurred in providing the service.
• In the first year, Uber incurred costs equivalent to 25% of the total contract value. Calculate the revenue recognized for the first year using the cost principle.