Thrift Manufacturing (Pty) Ltd was involved in a legal dispute during their 30 June 2023 financial year. The dispute resulted from an injury sustained by an employee while operating a manufacturing machine. The injury was sustained due to the incorrect installation of the manufacturing machine. The manufacturing machine was under guarantee with the supplier when the employee sustained the injury.

The legal claim received from the injured employee amounted to R550 000. The sup-plier of the manufacturing machine confirmed that they will reimburse Thrift Manufacturing (Pty) Ltd an amount of R1 200 000 due to the incorrect installation of the machine. The supplier also stated that the machine was not safe to use. At year-end, the amount of R1 200 000 has not been received from the supplier.

REQUIRED: In accordance with IAS 37, briefly discuss how Thrift Manufacturing (Pty) Ltd should account for the reimbursement received from the supplier in its financial statements for the year ended 30 June 2023. Also provide the general journal entry required to account for the reimbursement