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ABC company has a pending lawsuit against XYZ firm for copyrights of patent. It is estimated that ABC probably will win the case with 5 million.
ABC company will not disclose it in its books of accounts. Contingent liabilities are shown as foot notes to accounts. But $5 million is expected to be received by ABC company. Hence, it is a contingent liability of XYZ firm and not ABC company.
Hence, correct option is (c)
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