Arizona Desert Homes (ADH) constructed a new subdivision during 2020 and 2021 under contract with Cactus Development Co. Relevant data are summarized below:
Contract amount $ 2,820,000 Cost: 2020 1,160,000 2021 560,000 Gross profit: 2020 740,000 2021 360,000 Contract billings: 2020 1,410,000 2021 1,410,000
ADH recognizes revenue upon completion of the contract.
In its December 31, 2020, balance sheet, ADH would report:
A.) The contract asset, contract amount in excess of billings, of $1,410,000.
B.) The contract asset, deferred profit, of $360,000.
C.) The contract liability, billings in excess of cost, of $250,000.
D.) The contract asset, cost and profits in excess of billings, of $490,000.