Final answer:
Construction in progress exceeding billings on construction contracts is recorded as an asset on the balance sheet called construction in progress (CIP), representing resources anticipated to provide future economic benefits.
Step-by-step explanation:
When construction in progress exceeds billings on construction contracts, at the end of an accounting period, the excess is recorded as an asset on the balance sheet typically referred to as construction in progress (CIP). This occurs because the costs incurred to date have not yet been billed to the client, but economic value has been created for which the company expects future economic benefits. The construction in progress is an asset because it represents resources that are expected to provide future benefits when the project is completed and billed. Conversely, if billings exceed the costs, the excess amount is recorded as a liability, often referred to as 'billings in excess of costs'.