Wickhams plc specialises in bridge construction and has two contracts in progress at its year end, 31 March 20X8. Contract details extracted from the company’s costing records at 31 March 20X8 were as follows: LO6 Stour Bridge Avon Bridge £000 £000 Total contract selling price 7,000 4,000 Work certified to date 4,200 300 Costs to date 3,500 600 Estimated costs to completion 1,500 3,150 Progress billings 5,000 200 Construction on the Stour Bridge started in April 20X6. Work certified to date at 31 March 20X7 was £2,800,000 and revenue and costs were recognised for the year ended 31 March 20X7. No changes to the total estimated contract selling price or costs occurred between the start of the construction and 31 March 20X8.
However, on 11 April 20X8, the customer’s surveyor notified Wickhams plc of a fault in one of the bridge supports constructed during a severe frost in January 20X8. This will require remedial work in May 20X8 at an estimated additional cost of £400,000.
Construction on the Avon Bridge started in January 20X8.
Wickhams plc uses an output method based on the value of work certified at each year end to measure the progress towards satisfaction of the performance obligation.
Required:
For both contracts calculate the amounts to be included in the statement of profit or loss and statement of financial position of Wickhams plc for the year ended 31 March 20X8 in accordance with IFRS 15 Revenue from Contracts with Customers.