Question

One of the examples of the substance over form is ___________.

• A. Valuation of inventory
• B. Treatment of capital expenditures
• C. Recording of asset purchased under hire-purchase system
• D. Treatment of commission paid to consignee

Answer 1

Answer: (C)

Recording of asset purchased under hire-purchase system

In the given question one of the examples of substance over form is recording of asset purchased under hire-purchase system.

According the substance over form concept specifies that the economic form of the transaction should be recorded in the financial statements rather than just the legal form.