Question

In violation of company policy, lowell company erroneously capitalized the cost of painting its warehouse. the auditors examining lowell's financial statements would most likely detect this when: discussing capitalization policies with lowell's controller. examining maintenance expense accounts. observing, during the physical inventory observation, that the warehouse had been painted. examining the construction work orders supporting items capitalized during the year.

Answer 1

Answer: Examining the construction work orders supporting items capitalized during the year.

Explanation:

When the Auditors start to examine the work orders that support the Capitalization of items during the year, they will come across the work order for Painting the Warehouse.

Painting a warehouse is not to be capitalized if it had nothing to do with getting the warehouse ready for use by the company.