Q26 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		$	3,225,000
Cost:	2020		1,250,000
	2021		650,000
Gross profit:	2020		875,000
	2021		450,000
Contract billings:	2020		1,612,500
	2021		1,612,500

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

Multiple Choice

• The contract asset, cost and profits in excess of billings, of $512,500.

• The contract liability, billings in excess of cost, of $362,500.

• The contract asset, contract amount in excess of billings, of $1,612,500.

• The contract asset, deferred profit, of $450,000.