Z Co Filed Suit Against W Inc

Multiple Choice

Z Co. filed suit against W Inc. in 2018 seeking damages for patent infringement. At December 31, 2018, 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 2019. Z should report this award in its 2018 financial statements, issued in March 2019 as:

A) A receivable and deferred revenue of $40 million.
B) A receivable and revenue of $40 million.
C) A disclosure of a gain contingency of $40 million.
D) A disclosure of a gain contingency of an undetermined amount in the range of $30 million to $60 million.