1. In IASB (2016b, p. 5) it is stated: The IASB acknowledges that the change in lessee accounting (brought about by the release of IFRS 16) might have an effect on the leasing market if companies decide to buy more assets and, as a consequence, lease fewer assets.

Required: Provide a possible explanation as to why, when now required to capitalise leases, reporting entities might be more likely to buy more assets, and lease fewer assets

2. Fitbit Ltd has leased a machine on the following terms: Date of entering lease 1 July 2019 Duration of lease 5 years Life of asset 6 years Unguaranteed residual value $40,000 Lease payments inception (at the start) $60,000 Annual payments (5) $65,000 Implied rate 11.0 %

Required: Determine the Fair Value (rounded off) of the leased asset.