Tough Wood is a manufacturing company who prepares financial statements for every year ending $31$ March and issue authorized financial statements on $30$ May every year. The following transactions occurred during the year ended $31$ March $2023.$

Tough Wood was notified that a customer $($Monageng$)$ sued the company for his financial losses that were caused due to supply of faulty products on $15$ October $2022.$ Tough Wood defended the case, but it was estimated that they would have to pay P$32,000$ based on the progress of the case until $20$ August $2022.$ The company ultimately settled the case of P$27,500$ on $10$ May $2023.$

i$.$ Explain how the above events would be accounted for, as per IAS$37$ and IAS $10$ in financial statements for the year ended $31$ March $2023$of Tough Wood.