One of the 8 basic postulates mentioned in the NIF A-2 is that of Economic Substance, which establishes that priority must be given to the economic essence of transactions over their legal form.
Examples of the postulate “Economic Substance”
a) Lease
If a company leases equipment and the lease agreement is structured in such a way that at the end of the lease, the company acquires the equipment for a price significantly below market value (a low-price purchase option), this could be addressed accounting as an asset purchase with an associated loan, rather than a simple operating lease.
b) Revenue Recognition:
The Income Tax Law in Mexico establishes that income must be accumulated when the first of the following occurs:
- the good or service is delivered,
- is invoiced, or,
- payment is received.
However, for financial purposes, the recognition of income may differ from the legal one, since we have to take into account the obligations to be fulfilled, as well as assign the amounts of said obligations to be fulfilled.
We can summarize the above in the following example:
If a company receives an advance for the purchase of a good, it should be considered income for tax purposes; however, according to the “Economic Substance” of the transaction, we must record it as a liability, since it is a pending obligation. the company deliver the goods.
c) Services paid in advance
A company pays in advance for maintenance services for the next two years, to make an additional deduction for tax purposes. Even if the payment was made in a single year and the deduction is made in a single year, the accounting must reflect the service expense throughout the duration of the service (two years), distributing the cost as the service progresses. is received.
d) Income from subscriptions:
If a company charges its annual magazine subscriptions in advance, it must recognize revenue over the subscription period and not at the time payment is received. The above reflects that the service will be provided during the year and not at the time the payment is made.
That is, if on January 1, 2023 the company receives payment of 12,000 pesos for its annual subscription, we will see a monthly income of 1,000 pesos reflected during the year.
Conclusions
I derive that transactions may have significant differences between their legal form and their nature, it is essential to present our financial statements giving priority to the economic essence of the transaction over the legal one.
What was mentioned in the previous paragraph allows us for our financial information to reflect the reality of our companies and with this we make better operational and financial decisions, increasing our economic benefits.
We invite you to know our BLOG
ENGLISH 
ESPANOL
0 comentarios