Arizona Desert Homes (ADH) Constructed a New Subdivision During 2017

Arizona Desert Homes (ADH) constructed a new subdivision during 2017 and 2018 under contract with Cactus Development Co. Relevant data are summarized below: ADH recognizes revenue over time with respect to these contracts. In its December 31, 2017, balance sheet, ADH would report:

A) The contract asset, cost and profits in excess of billings, of $500,000.
B) The contract liability, billings in excess of cost, of $300,000.
C) The contract asset, contract amount in excess of billings, of $1,500,000.
D) The contract asset, deferred profit, of $400,000.

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