Contingent pricing of PPE and intangible assets

ABC plc has entered into an agreement, outside of a business combination, to purchase a machine for consideration comprising an upfront fixed sum of £450,000 and variable sums, contingent upon the volume of production from the machine over a three year period (or sale proceeds should the machine be sold during the same period).

ABC plc wants to understand when and how the variable payments should be recognised and accounted for.