Arizona Desert Homes (ADH) constructed a new subdivision during 2012 and 2013 under contract with Cactus Development Co. Relevant data are summarized below: Contract Amount $3,000,000 Cost: 2012 1,200,000 2013 600,000 Gross Profit: 2012 800,000 2013 400,000 Contract billings: 2012 1,500,000 2013 1,500,000 ADH uses the percentage-of-completion method to recognize revenue.

In its December 31, 2012, balance sheet, ADH would report:

A.	The asset, cost and profits in excess of billings, of $500,000.
B.	The liability, billings in excess of cost, of $300,000.
C.	The asset, contract amount in excess of billings, of $1,500,000.
D.	The asset, deferred profit, of $400,000.