Which of the following is most correct?
When assets acquired using finance leases, which have to be maintained and insured by the entity are capitalised in the financial statements, this is an example of:

Question

Quizplus · Accepted Answer

The capitalization of assets acquired through finance leases, which the entity must maintain and insure, is an example of the application of substance over form. This accounting principle emphasizes the economic reality of transactions rather than their legal form, recognizing the asset and corresponding liability on the balance sheet to reflect the entity's control over the asset and the obligation to pay for it.

Which of the Following Is Most Correct