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Accounting




Contrived Form


The legal (contrived/ man-made) basis and manifestation (legal formalities) for establishing an entity’s ownership, rights, and interest in assets and obligation in liabilities. If the title (legal manifestation of ownership) of an asset is not fully and duly transferred, the asset will not be deemed to have been recorded legally in the financial statements of an entity. Contrived or legal form constitutes the legal capacity in which a reporting entity holds assets and liabilities on ifs financial statements.

The contractual arrangements for holding assets and mobilizing funds from clients, for example, shall be considered in conjunction with applicable laws, regulations and established custom and practice. Consequently, an entity can determine and recognize its rights and obligations and those of other parties/ stakeholders. However, the way in which the legal arrangement is formulated is relevant only in its ability to affect the rights and obligations in question.

However, under the rule of substance and form, if information presented in the financial statements is to represent faithfully (through faithful representation) the transactions and other events that it purports to represent, an entity must account for, and present, these transactions and events in accordance with their economic reality (substance) and not merely their legal form. Consistency of substance and legal form is not always warranted. For example, where rights and beneficial interest in an asset are transferred but the legal formalities/ documentation are still in finalization, the recording of acquisition/ disposal would in substance represent the deal forged, even though not yet in legal form.



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Accounting is the language of business, everywhere, worldwide. It is the means by which virtually every business communicates information about its operations, irrespective of size, scale, objectives, ...
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