The “substance over the form”. Evidence on the Italian Leasing Accounting after the EU Regulation 2017/1986

Abstract

This research aims to retrace the historical process of the evolution of the accounting principle of the prevalence of the substance over the form with specific reference to the Italian system and in comparison with the different international approaches. The topic is very current in Italy following the recent regulatory changes, especially the transposition of the EU Regulation 2017/1986 stating the obligation to account for the leasing contracts according to the provisions contained in the new IFRS 16. To implement the new accounting standard the OIC, Italian Accounting Body,  has modified the Italian principle OIC 1, Financial Statement Purposes and Postulates providing for a new formulation of the principle of the prevalence of the substance over the form. This caused a new method to account for the lease and  effects on the calculation of financial statement indicators and the related assessment of the financial-equity balance.