UPSA entered into a 20-year operating lease for a property on 1 October 2000 which has a remaining life of eight years at 1 October 2012. The rental payments are GHC 23 million per annum.

Prior to 1 October 2012, UPSA obtained permission from the owner of the property to make some internal alterations to the property so that it can be used for a new manufacturing process which UPSA is undertaking. The cost of these alterations was GHC7 million and they were completed on 1 October 2012 (the time taken to complete the alterations can be taken as being negligible). A condition of being granted permission was that UPSA would have to restore the property to its original condition before handing back the property at the end of the lease. The estimated restoration cost on 1 October 2012, discounted at 8% per annum to its present value, is GHC5 million.

Required:

Explain how the lease, the alterations to the leased property and the restoration costs should be treated in the financial statements of UPSA for the year ended 30 September 2013.