Assume that a government received a $5,000,000 expenditure-driven grant in Year 1 for a project that was expected to take three years to complete. Further assume that qualifying expenditures for the project, which actually took four years to complete, were as follows: Year 1-$1,000,000; Year 2-$2,500,000; Year 3-$1,000,000; Year 4-$400,000. Assuming the grant receivable is available in each period, the government should report grant revenues in Year 2 in the amount of

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The grant revenue should be recognized as qualifying expenditures are incurred. Therefore, in Year 2, $2,500,000 of qualifying expenditures were incurred, which is the amount of grant revenue that should be recognized in that year. The remaining $2,500,000 of the grant should be recognized in Year 3, when the remaining $1,000,000 of qualifying expenditures were incurred.

Assume That a Government Received a $5,000,000 Expenditure-Driven Grant in Year