Explain this

Accountancy

What is substance over form In accounting??

Dhakshana Dhakshana

CFA L2

★ 18K+

09-Mar-23 22:39

488

Answers (5)

Best Answer

Example: Your company has purchased a property but the registration and other legal formalities are pending. Your company has the possession of the property and is using the property. So you will be showing this property as an asset in your balance sheet irrespective of whether or not the legalities are completed. This is substance over form i.e. reality over legality.

Neha Baliga

CA Inter

★ 16K+

09-Mar-23 23:45

Giving the importance to econmic substance and not giving to legal form

THARUN KUMAR EKAMBARAM

CA Foundation

★ 18K+

09-Mar-23 22:50

THARUN KUMAR EKAMBARAM

Giving the importance to econmic substance and not giving to legal form

Can you make it little more simpler with an example

Thread Starter

Dhakshana Dhakshana

CFA L2

★ 18K+

09-Mar-23 22:52

Bro if Mr.A person is owned car and another person Mr.B is thinking that he will use the some one car for rental for 10 years. So in here user should charge depreciation and not the owner. Because rather looking who is the person who legally owned making depreciation will be charged by the user who is using it economically.

THARUN KUMAR EKAMBARAM

CA Foundation

★ 18K+

09-Mar-23 23:06

You will learn more examples about these in AS-19, AS-9

CA Suraj Lakhotia

Admin

10-Mar-23 17:23