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 indicates a limitation related to capitalised expenses. Capitalising expenses means that short-term costs are treated as long-term assets, which may misrepresent the financial health of a business. This act may lead auditors to question the accuracy of expenses reported in financial statements, suggesting that such accounting practices can distort the true financial condition of the business.