According to AS1:DISCLOSURE OF A/CING POLICIES para 17.b
Substance over Form : "The a/cing treatment & presentation in F/s of transaction & events should be goverend by their substance & not merely by the legal form."
Can anyone tell me that, what does it actually mean ? And practically where we can apply the same?
Thank u
It means that the Events/transactions should be dealt with from the point of view of the ultimate ISSUE i.e. EFFCT ON DECISION OF USERS OF FINANCIAL STATEMENTS. And not just for fulfilling the legal obligations. EXAMLPLE....
Suppose a Software firm with a revenue of Rs 200 crores is fined Rs 1 Lac by court for supplying defective Codes to an Organisation say XYZ Bank. Now there is no legal obligation to disclose the same as a distinct item becoz the sum is much lower than 1% of total revenue ( the legal obligation arises only when the item involves more than 1% of total revenue in this case that wud be 2 crore). HOWEVER it OUGHT to be shown as a distinct item becoz it reflects TECHNICAL INCOMPETENCE and PROFESSIONAL NEGLIGENCE on the part of the company which will seriously affect the decisions of various stakeholders.
Thank you 
My Pleasure
CAclubindia
