[amp_mcq option1=”Matchig concept” option2=”Accrual concept” option3=”Prudence concept” option4=”Substance over form concept” correct=”option4″]
The correct answer is: D. Substance over form concept.
The substance over form concept states that the accounting records should reflect the economic substance of a transaction, rather than its legal form. In the case of land on lease, the company does not own the land, but it does have the right to use it for a period of time. The substance of this transaction is that the company has acquired an asset, even though it does not have legal ownership of the land. Therefore, the land should be shown on the balance sheet as an asset.
The matching concept states that expenses should be matched with the revenues they generate. This concept is not relevant in the case of land on lease, because the company does not generate any revenue from the land.
The accrual concept states that revenues and expenses should be recorded when they occur, regardless of when cash is received or paid. This concept is also not relevant in the case of land on lease, because the company does not receive any cash from the land.
The prudence concept states that accountants should be conservative in their estimates and avoid overstating assets or revenues. This concept is not relevant in the case of land on lease, because the company does not have any ownership interest in the land.
Therefore, the correct answer is: D. Substance over form concept.