During 2006, Smith Co. filed suit against West, Inc. seeking damages for patent infringement. At December 31, 2006, Smith’s legal counsel believed that it was probable that Smith would be successful against West for an estimated amount in the range of $75,000 to $150,000, with all amounts in the range considered equally likely. In March 2007, Smith was awarded $100,000 and received full payment thereof. In its 2006 financial statements, issued in February 2007 how should this award be reported?

1. As a receivable and revenue of $100,000.
2. As a receivable and deferred revenue of $100,000.
3. As a disclosure of a contingent gain of $100,000.
4. As a disclosure of a contingent gain of an undetermined amount in the range of $75,000 to $150,000.