Arizona Desert Homes $($ADH$)$ constructed a new subdivision during $2023$ and $2024$ under contract with Cactus Development Company. Relevant data are summarized below:

Contract amount $ $3,000,000$

Cost: $20231,200,000$

$2024600,000$

Gross profit: $20230$

$20241,200,000$

Contract billings: $20231,500,000$

$20241,500,000$

ADH recognizes revenue upon completion of the contract.

In its December $31,2023,$ balance sheet, ADH would report:

Multiple Choice

the contract liability, billings in excess of cost$,$ of $$300,000.$

the contract asset, cost and profits in excess of billings, of $$500,000.$

the contract asset, deferred profit, of $$400,000.$

the contract asset, contract amount in excess of billings, of $$1,500,000.$