ifrs 15

Hi Mike!

I have an issue solving a question in the BPP kit.
Need your help

On 1 October 20X2 Pricewell entered into a contract to construct a bridge over a river. The total contract revenue was $50 million and construction is expected to be completed on 30 September 20X4.
Costs to date are:
$m
Materials, labour and overheads: 12
Specialist plant acquired 1 October 20X2: 8
The sales value of the work done at 31 March 20X3 has been agreed at $22 million and the estimated cost to complete (excluding plant depreciation) is $10 million. The specialist plant will have no residual value at the end of the contract and should be depreciated on a monthly basis. Pricewell recognises satisfaction of performance obligations on the percentage of completion basis as determined by the agreed work to date
compared to the total contract price.
What is the profit to date on the contract at 31 March 20X3?

1.The answer is $8,800,000.
2. How do we deal with the $8M specialist cost? Do we include the whole $8M or the depreciation as cost?

Thanks.