Question
If rights and beneficial interest in a property is
transferred but documentation and legal formalities are pending then seller & purchaser should record in their accounts as sale & purchase. Which principle is applied hereSolution
The principle of "substance over form" emphasizes that the economic reality of a transaction should be considered more important than its legal or accounting treatment. In the scenario described, where rights and beneficial interest have been transferred even though documentation and legal formalities are pending, recognizing the transaction as a sale and purchase reflects the substance of the transaction, as opposed to just the legal form.
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