Kelly Limited, a company that prepares its financial statements to 31 December each year, commenced the construction of a property for its own use on 1 March 2017. However, construction was halted in July and August 2017 to enable certain design issues to be resolved. The costs incurred during the year ended 31 December 2017 in relation to the construction of the new property were as follows:

Rather than borrow specifically for this project, Kelly Limited included the financing in the overall funding requirements for the company. During 2017, Kelly Limited was financed as follows:

Kelly Limited expects the construction to be completed on schedule in June 2018.
Requirement Explain how Kelly Limited should account for the construction of the property in its financial statements for the year ended 31 December 2017.

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Materials Labour Other construction costs General allocation of central overheads Site preparation costs Total 1,800,000 1,500,000 600,000 500,000 300,000 4,700,000