This question relates to IAS 18 - Revenues, which is not valid anymore...

Kappa prepares financial statements to 31 March each year. During the year ended 31 March 2013, Kappa entered into the following transactions:

(i) On 1 January 2013, Kappa supplied goods on credit to a customer. The goods had a list price of $450,000. Due to the size of the order, the customer received a volume discount of $50,000 and the invoice to the customer showed an amount payable of $400,000. The terms of sale allowed the customer a prompt payment discount of $20,000 provided payment was made before 31 January 2013. On 30 January 2013, the customer paid $380,000 in full and final settlement of the amount payable. (2 marks)

(ii) On 31 March 2013, Kappa supplied two machines to a customer. Both machines were accepted by the customer on 31 March 2013. Machine 1 was a machine that was routinely supplied by Kappa to many customers and the installation process was very simple. Machine 1 was installed on 2 April 2013 by employees of the customer. Machine 2 was more specialised and the installation process more complicated, requiring significant assistance from Kappa. Machine 2 was installed between 2 and 5 April 2013. Details of costs and sales prices are as follows:

(iii) On 30 September 2012, Kappa sold a property to a bank for $2 million. The carrying amount of the property at the date of sale was $1·5 million and its market value was $3·5 million. Property prices are expected to rise at an annual rate of 5% for the foreseeable future. Kappa continued to occupy this property but paid no rent to the new owners. Kappa has the option to repurchase the property on 30 September 2017 for $3·221 million. Kappa’s credit rating is such that financial institutions would require an annual interest rate of 10% on loan finance to Kappa. (4 marks)

(iv) On 30 September 2012, Kappa delivered a machine to a customer that had been manufactured to that customer’s requirements. The machine cost Kappa $600,000 to manufacture and the agreed selling price was $1,007,557. Kappa agreed to accept payment on 30 September 2015. Kappa would expect an annual rate of return of 8% on loan investments. The present value of $1 receivable in three years’ time at an annual discount rate of 8% is approximately 79·4 cents. (4 marks)

Required:
Explain and show how the four transactions would be reported in the financial statements of Kappa for the year ended 31 March 2013 and (for transaction (ii) ONLY) the year ended 31 March 2014.

Note: The mark allocation is shown against each of the four transactions above.