1. Mellor has produced its draft financial statements for the year ended 30 September 2013 and two issues have arisen: 1. On 1 September 2013, Mellor factored (sold) Rs 2 million of trade receivables to Lalease. Mellor received an immediate payment of Rs 18 million and credited this amount to receivables and charged Rs 200,000 to administrative expenses. Mellor will receive further amounts from Lalease depending on how quickly Lalease collects the receivables. Lalease will charge a monthly administration fee of Rs 10,000 and 2% per month on its outstanding balance with Mellor. Any receivables not collected after four months would be sold back to Mellor; however, Mellor expects all customers to settle in full within this period. None of the receivables were due or had been collected by 30 September 2013.

2. On 1 October 2012, Mellor sold a property which had a carrying amount of Rs 35 million to a property company for Rs 5 million and recorded a profit of Rs 15 million on the disposal. Part of the terms of the sale are that Mellor will rent the property for a period of five years at an annual rental of Rs 400,000. At the end of this period, the property company will sell the property through a real estate company/property agent at its fair value which is expected to be approximately Rs 65 million. Mellor will be given the opportunity to repurchase the property (at its fair value) before it is put on the open market.

3. Mellor sold a piece of heavy equipment for Rs 10,000 under a financing agreement, having an effective interest rate of 7.931%. The sale took place on 1 October 2012. Annual installments of 2,000 are due each year for five years from the date of purchase. If the buyer had paid cash for the equipment, the sales price would have been 8,000.

Explain, and quantify where appropriate, how Mellor should account for the above three issues in its financial statements for the year ended 30 September 2013.

Additionally for (3) above, calculate the revenue that should be recognized in the next four years too.