Z Co Filed Suit Against W, Inc

Z Co. filed suit against W, Inc. in 2009 seeking damages for patent infringement. At December 31, 2009, 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 2010. Z should report this award in its 2009 financial statements, issued in March, 2010 as

A) A receivable and unearned 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.SFAS #5 states that gain contingencies should not be recognized in the financial statements until realized.Adequate disclosure should be made in the footnotes but care should be taken to avoid misleading implications as to the likelihood of realization of the contingent gain.