Under the percentage$-$of$-$completion method, how should the balances of Billings on Construction in Process and Construction in

Process be reported prior to the completion of a long$-$term contract?

Billings on Construction in Process as revenue and Construction in Process as inventory.

Net, as revenue from construction if a credit balance, and as a loss from construction if debit balance.

Billings on Construction in Process as a deferred revenue and Construction in Process as a deferred expense.

Net, as a current asset if a debit balance, and as a current liability if a credit balance.