The partner on the Eagle View engagement, Ann Dutra, would like you to become more familiar with the initial planning of an audit. To further that goal, she has asked you to prepare a memo summarizing your analysis of Eagle View as a potential client. You should provide your conclusion on whether RL should accept Eagle View as a client and support that with your analysis by answering the following questions.

Who is right in this case and why? The auditor is right.

Address the capitalization issue. What is the issue exactly? The interest not being capitalized and also how costs are being expensed. Why is it wrong? What are the principles that should be applied here?