Find journal entry for cougar corp to record the contingent

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Problem 1: On July 15th, 2020, Cougar Corp sued Husky Corp for patent infringement and as of December 31st, 2020, the case has not yet been resolved. Cougar Corp's management estimates that the likelihood of winning the case against Husky Corp is probable and the amount of the gain is reasonably estimable. The journal entry for Cougar Corp to record the contingent gain on December 31st includes a:

Multiple Choice

Option 1:
Debit to accounts receivable.

Option 2:
Credit to gain.

Option 3:
Credit to revenue.

Option 4:
A contingent gain should not be recorded.

Reference no: EM132813149

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