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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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