Factoring Arrangement

Dear sir,

I’m having trouble understanding factoring arrangement as a loan. I have a question on this, can you look at this? thanks.

“On 31 March 20×6 Highwood factored trade receivables with a book value of $10 million to Easyfinance. Highwood received an immediate payment of $8.7 million and will pay Easyfinance 2% per month on any uncollected balances. Any of the factorered receivable outstanding after six months will be refunded to Easyfinance. Highwood has derecognised the receivables and charged $1.3milllion to administrative expenses. If Highwood had not factored these receivables it would have made an allowance of $600,000 against them.”

The provided answer is: ” The factoring arrangement is in substance a loan of $8.7m. To refelect this, the 10m receivables are reinstated less the allowance of 600.

Debit receivables 9400
Debit Admin expenses 600
Credit Loan payable 8700
Credit Admin expenses 1300
”
And my questions are :
1) I understand why the selling with recourse should mean recognizing liability. But why should the entire factored amount of 8700 be recognized as liability? the seller is unlikely to be obligated to pay the factor the entire amount unless the entire amount is not collectible?
2) how to understand the admin expenses of 1300? Can I consider it as interest expenses on the factoring? But on a second thought, I think that shouldn’t because it would make it like Repurchase agreement, where loans are recognized when repurchase price exceeds original selling price? Then what role does this 1300 effectively play in such a financing transaction?
3) if the above scenario is a factoring without recourse, how much loss should the seller recognize in its P/L? Is it 10 – 8.7 = 1.3 or should the allowance for receivables be accounted for : 10 – (8.7 – 0.6) = 1.9 ?

thank you very much!
Lm