A lessee has the right to use an underlying asset during the lease term and an obligation to make payments to the lessor for providing the right to use that asset. The lessee also has an obligation to return the underlying asset in a specified condition to the lessor at the end of the lease term. The lessor has a right to receive payments from the lessee for providing the right to use the underlying asset. The lessor also retains rights associated with ownership of the underlying asset. write down the Conceptual Framework concepts that the IASB used in these paragraphs to support its standard-setting decisions.

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.

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

According to AASB 16 Leases a right-of-use asset is required to be. A depreciated over the lease term, where the cost of the right-of-use lease asset reflects that the lesseewill exercise the purchase option at end of the lease termo B depreciated over the underlying asset's useful life, where the cost of the lease asset reflects that thelessee will exercise the purchase option at end of the lease termo C depreciated over the longer of the lease term and its useful life of the right-of-use lease asset, wherethe lessee will not obtain ownership at the end of the lease termo D depreciated from lease commencement to the longer of the lease term and its useful life, only wherethe economic benefits to be realised from using the asset are for a period of greater than ten years

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

Which of the following statements is correct in accordance with AASB 16 Leases?Group of answer choicesVariable lease payments may be increased or decreased during the lease term because of changes in facts and circumstances occurring after the asset is made available to the lessee to use, other than the passage of time.Payment for executory costs reimbursed by the lessee after being paid by the lessor on behalf of the lessee are included in the calculation of lease payments.Right-of-use asset is depreciated from lease commencement to the longer of the lease term and its useful life, only where the economic benefits to be realised from using the asset are for a period of greater than ten years.Payments that are made by a lessee at commencement date are included in the initial amount recognised for the lease liability.