O'Hara Company recognizes revenue on long-term construction contracts under !FRS. It cannot estimate progress toward completion accurately, and so uses the cost recovery method (also called the 'zero profit method') to estimate revenue. O'Hara writes a contract to deliver an automated assembly line to Easley Motors. Easley will pay $2,000,000 to O'Hara, and O'Hara estimates the line will cost $1,500,000 to construct The job is estimated to take three years to complete. In the first year of its contract with Easley Motors, O'Hara incurs $1,000.000 of cost, which O'Hara believes will eventually be recovered in the contract. How much revenue will O'Hara recognize in the first year of the contract?
a. $1,000,000
b. $0
c. $1,333,333
d. $666,667