If a company wins a court case and gets a financial settlement, how do you account for that on the financial statement?
Answers
Recorded as miscellaneous income when received. No entry until receives as the award is a gain contingency, notrecordable under GAAP. Disclosure of award and progress required [if material], and required for recorded amount when received, if material.
Hmmmm. It depends. In a perfect world you placed a note on your statements regarding the probable outcome of the case, i.e. a Contingency. But based on figures I have seen, less than 50% of companies do that.
Now I am going to assume that settlements are not part of your business, i.e. it is an irregular item counted as an unusual gain. Personally I hate any category termed "Misc." Pet peeve of mine.
You can show it on your income statement but it should be separated from "Income from Continuing