On 1 July 20X6 Pentose Construction plc entered into a contract to construct a bridge over a river. The agreed price of the bridge is £5 million and construction is expected to be completed on 30 June 20X8. Pentose incurred the following costs in relation to this contract by 31 December 20X6: LO6

£000 Materials, labour and overheads 1,200 Specialist plant acquired 1 July 20X6 800 The value of the work certified at 31 December 20X6 has been agreed at £2.2 million and the estimated costs to complete (excluding plant depreciation) are £1 million. The specialist plant will have no residual value at the end of the contract and should be depreciated on a monthly basis.
Progress billings to the customer by 31 December 20X6 total £570,000. Pentose recognises revenues on such contracts using an input method.
Required:
Discuss the accounting treatment of this contract in accordance with IFRS 15 Revenue from Contracts with Customers, and show the resulting figures which would appear in the statement of profit or loss for the financial year ended 31 December 20X6 and statement of financial position at this date.