Substance over form

What Is Substance Over Form of Accounting?

The concept of Substance over Form concept implies that the capture and recording of financial transactions should be based on the economic substance to the entity rather than being solely based on their legal form.

A prime example of used to explain this concept is the finance lease arrangement where the lessee does not have the legal ownership of the leased asset but since that asset is being used for generating economic activity for the business it is shown as an asset for the business.

Prudence Concept Accounting

One thought on “Substance over form”

  1. Crypto Hix says:

    Great article, very useful!

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