AASB 16/IFRS 16 defines a lease as: Reading required:            Learning objective 11.1 on page 318Group of answer choicesa contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.a contract, or part of a contract, that conveys the right to transfer a liability for a period of time in exchange for an asset.a contract that conveys the right for the lessor to obtain substantially all of the economic benefits of the identified asset.a contract, or part of a contract, that conveys the right to transfer ownership of an asset (the underlying asset) for a period of time in exchange for consideration.

A lease refers to a legal agreement between 2 parties, the lessor, who grants the right to use a specific asset for a predetermined period of time, and the lessee who gains the right to use the asset without having to purchase it outright.2 pointsTRUEFALSE

A finance lease is defined in AASB 16/IFRS 16 as: Reading required:            Learning objective 11.3 on page 332Group of answer choicesa rental agreement of less than 12 months' duration.a lease that is not classified as an operating lease.a lease that does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset.a lease that transfers substantially all the risks and rewards incidental to ownership of an underlying asset.

All contracts create rights and obligations for the parties to the contract. Lessee accounting in IFRS 16 considers the rights and obligations created by a lease from the perspective of the lessee. As discussed further in paragraphs BC105–BC126, a lease is defined as a ‘contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’. The lessee accounting model in IFRS 16 reflects the economics of a lease because, at the commencement date, a lessee obtains the right to use an underlying asset for a period of time, and the lessor has delivered that right by making the asset available for use by the lessee. write down the Conceptual Framework concepts that the IASB used in these paragraphs to support its standard-setting decisions.

A lease is a contractual arrangement by which the lessor provides the lessee the right to use an asset for a specified period of time. Group startsTrue or False

Which of the following BEST DESCRIBES the elements that should be considered when assessing whether a contract contains a lease arrangement under AASB 16 Leases?  a) The underlying asset is clearly identified, the lessee has a right to control the underlying asset and is entitled to substantially all of the underlying asset’s economic benefits Correct!  b) The underlying asset is clearly identified, the lessee has a right to control the use of underlying asset and is entitled to substantially all of the underlying asset’s economic benefits