JK has been sued for breach of copyright laws. Its lawyers have stated there is a 50% chance of losing the case and having to pay $250,000 damages, there is a 30% chance of losing the case and having to pay $500,000 damages and there is a 20% chance of winning the case. How should this claim be recorded in the financial statements under IAS 37?

A. Disclose a contingent liability in the notes to the accounts

B. Debit profit or loss 250,000 and Credit liability 250,000

C. Debit profit or loss 275,000 and Credit liability 275,000

D. Debit profit or loss 500,000 and Credit liability 500,000