Arizona Desert Homes (ADH) constructed a new subdivision during 2017 and 2018 under contract with...
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Accounting
Arizona Desert Homes (ADH) constructed a new subdivision during 2017 and 2018 under contract with Cactus Development Co. Relevant data are summarized below:
Contract amount
$
2,730,000
Cost:
2017
1,140,000
2018
540,000
Gross profit:
2017
710,000
2018
340,000
Contract billings:
2017
1,365,000
2018
1,365,000
ADH recognizes revenue upon completion of the contract. In its December 31, 2017, balance sheet, ADH would report:
Multiple Choice
The contract asset, deferred profit, of $340,000.
The contract asset, contract amount in excess of billings, of $1,365,000.
The contract liability, billings in excess of cost, of $225,000.
The contract asset, cost and profits in excess of billings, of $485,000.
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