On December $31,2020,$ Eastern Co$.$ enters into a two$-$year contract with a customer. An allocation of the cost of salaries of sales and administrative staff is estimated to be $$4,800.$ Salaries are paid in January of $2021.$ Eastern Co$.$ expects to recover the allocated salary costs from the amounts billed on the contract. The contract does not have a renewal option. How would Eastern account for the contract cost in its year$-$end financial statements dated December $31,2020?$

Select one:

A$.$

Eastern Co$.$ would recognize an asset $($Contract Cost$)$ of $$4,600$ and a liability $($Salaries Payable$)$ of $$4,800,$ on December $31,2020,$ and expense $($Contract Cost Expense$)$ of $$200$ for the year $2020.$

B$.$

Eastern Co$.$ would recognize an asset $($Contract Cost$)$ of $$4,800$ and a liability $($Salaries Payable$)$ of $$4,800,$ on December $31,2020.$

C$.$

Eastern Co$.$ would recognize an asset $($Contract Cost$)$ of $$4,400$ and a liability $($Salaries Payable$)$ of $$4,800,$ on December $31,2020,$ and expense $($Contract Cost Expense$)$ of $$400$ for the year $2020.$

D$.$

Eastern Co$.$ would recognize a liability $($Salaries Payable$)$ of $$4,800,$ on December $31,2020,$ and expense $($Salaries Expense$)$ of $$4,800$ for the year $2020.$