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		$	2,550,000
Cost:	2020		1,100,000
	2021		500,000
Gross profit:	2020		650,000
	2021		300,000
Contract billings:	2020		1,275,000
	2021		1,275,000

ADH recognizes revenue upon completion of the contract. In its December 31, 2020, balance sheet, ADH would report:

Multiple Choice

The contract asset, contract amount in excess of billings, of $1,275,000.

The contract asset, deferred profit, of $300,000.

The contract asset, cost and profits in excess of billings, of $475,000.

The contract liability, billings in excess of cost, of $175,000.