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What is meant by substance over form concept and its application in financial reporting?

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Question added by Taofeek Junaid , General Manager, Accounts/Logistics(Admin) , FMCG Industry Nigeria Ltd
Date Posted: 2014/12/06
Mustafa Ali
by Mustafa Ali , Financial Controller , Hemani Group of Companies

The transaction should show the economic reality rather then its legal form or how it is recorded. e.g. An operating and Finance Lease.

 

Like if in accounting a lease whose conditions are showing that its a finance lease but we are considering it as a operating lease and not capitalizing the asset.

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