USA revenues from lawsuit resolution

[AGH the CPA]

Our company won a recent lawsuit. I'm fairly new in the position but based on my research, I cant find where we made any kind of allowance or reserve or any kind of entry for this. I'm assuming my predecessor wanted to be conservative about the likelihood of winning. That said, where on earth to I record the proceeds from this? "Other Income"? The $$ relates to labor and costs from prior years.

 

[bklynboy]

GAAP does not allow you to record contingent gains which this is - only reserves for probable losses. Its correct it was not recorded and should now be since the gain is no longer contingent but has materialized. need more info on what this was about to see how to record. Could be Other Income, reduction to previously recorded expense, capital gains adjustment or extraordinary gain.

 

[AsimKuddoos]

Win a lawsuit will be treated as contingent asset.
A contingent asset is a possible asset that may arise because of a gain that is contingent on future events that are not under an entity's control. According to the accounting standards, a business does not recognize a contingent asset even if the associated contingent gain is probable.
Did you realize gain????

 

[AGH the CPA]

no contigency was made for the lawsuit. We won and have received funds. It sounds like OTHER INCOME is where I need to book it.