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Arizona Desert Homes (ADH) constructed a new subdivision during 2015 and 2016 under contract with Cactus Development Co. Relevant data are summarized below: Contract amount
Arizona Desert Homes (ADH) constructed a new subdivision during 2015 and 2016 under contract with Cactus Development Co. Relevant data are summarized below: |
Contract amount | $2,550,000 | |
Cost: | 2015 | 1,100,000 |
2016 | 500,000 | |
Gross profit: | 2015 | 650,000 |
2016 | 300,000 | |
Contract billings: | 2015 | 1,275,000 |
2016 | 1,275,000 |
ADH recognizes revenue upon completion of the contract. |
In its December 31, 2015, balance sheet, ADH would report: |
The contract asset, contract amount in excess of billings, of $1,275,000
The contract liability, billings in excess of cost, of $175,000
The contract asset, cost and profits in excess of billings, of $475,000
The contract asset, deferred profit, of $300,000
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