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 Cost: Gross profit: Contract billings: $3,000,000 2020 1,200,000 2021 2020 2021 2020 1,500,000 2021 1,500,000 600,000 800,000 400,000 ADH recognizes revenue over time with respect to these contracts. Multiple Choice n its December 31, 2020, balance sheet, ADH would report: The contract asset, cost and profits in excess of billings, of $500,000. The contract liability, billings in excess of cost, of $300,000. The contract asset, contract amount in excess of billings, of $1,500,000. The contract asset, deferred profit, of $400,000.

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