Z Co. filed suit against W Inc. in 2016 seeking damages for patent infringement. At December 31,
Question:
Z Co. filed suit against W Inc. in 2016 seeking damages for patent infringement. At December 31, 2016, legal counsel for Z believed that it was probable that Z would be successful against W for an estimated amount in the range of $30 million to $60 million, with each amount in that range considered equally likely. Z was awarded $40 million in April 2017. Z should report this award in its 2016 financial statements, issued in March 2017 as:
Multiple Choice
A receivable and deferred revenue of $40 million.
A receivable and revenue of $40 million.
A disclosure of a gain contingency of $40 million.
A disclosure of a gain contingency of an undetermined amount in the range of $30 million to $60 million.
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura