Substance over form

Hi. I am jus giving you a good example i found on this concept.

Let say in a Group of companies, Company A has recorded one transaction as a sale to a customer. Another transaction records a loan to the same customer for a similar amount. In this case, when the transactions are considered together, the sale may be without substance as it has actually been funded by the same group of company.

According to the principle of substance over form,the real fact of the matter is taken into account not the strict form or format.

For eg:

When goods are purchased on hire purchase, the purchaser becomes the owner only after the payment of last installment.But for practical purpose the asset is with the purchaser right from the beginning.It is acceptable to the treat this item as an asset the installments due as loan.