Auditors have discovered that the value of legal fees paid has been included in the asset value of a new warehouse purchased by a business - HSC - SSCE Business Studies - Question 16 - 2013 - Paper 1

The inclusion of legal fees in the asset value of a warehouse demonstrates the limitation of financial reports related to capitalised expenses. Capitalised expenses are costs that are recorded as part of the value of an asset, which can misrepresent the financial position of the business. This practice may lead to inflated asset values and does not reflect the actual outflow of resources, emphasizing the need for accurate accounting treatment of costs.