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		$	3,000,000
Cost:	2020		1,200,000
	2021		600,000
Gross profit:	2020		800,000
	2021		400,000
Contract billings:	2020		1,500,000
	2021		1,500,000

ADH recognizes revenue over time with respect to these contracts. In its December 31, 2020, balance sheet, ADH would report:

Multiple Choice

• 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.