During year 2, Smith Co. filed suit against West, Inc. seeking
damages for patent infringement. At December 31, year 2,
Smith legal counsel believed that it was probable that Smith
would be successful against West for an estimated amount in the range of $75,000 to $150,000, with all amounts in the range considered equally likely. In March year 3, Smith was awarded
$100,000 and received full payment thereof. In its year 2 financial statements, issued in February year 3, how should this award be reported?

A. As a receivable and revenue of $100,000.

B. As a receivable and deferred revenue of $100,000.

C. As a disclosure of a contingent gain of $100,000.

D. As a disclosure of a contingent gain of an undetermined amount in the range of $75,000 to $150,000.

Answer rating: 100% (QA)

For the year ended December 31 2019 the company could record the probable amoun... View the full answer