AS 1
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
06 August 2010
WHAT IS THE MEANING OF SUBSTANCE OVER FORM IN RELATION TO ACCOUNTING STANDARD 1
06 August 2010
The accounting treatment and presentation in financial statements of
transactions and events should be governed by their substance and notmerely
by the legal form.
The substance of transactions or other events is not always consistent with that which is apparent from their legal or contrived form. For example, an enterprise may dispose of an asset to another party in such a way that the documentation purports to pass legal ownership to that party; nevertheless, agreements may exist that ensure that the enterprise continues to enjoy the future economic benefits embodied in the asset. In such circumstances, the reporting of a sale would not represent faithfully the transaction entered into (if indeed there was a transaction).
transactions and events should be governed by their substance and notmerely
by the legal form.
The substance of transactions or other events is not always consistent with that which is apparent from their legal or contrived form. For example, an enterprise may dispose of an asset to another party in such a way that the documentation purports to pass legal ownership to that party; nevertheless, agreements may exist that ensure that the enterprise continues to enjoy the future economic benefits embodied in the asset. In such circumstances, the reporting of a sale would not represent faithfully the transaction entered into (if indeed there was a transaction).
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