12.Cruise Ltd is a large Australian aviation company which enters into numerous lease contracts to efficiently manage its operations. Recently Cruise Ltd enters into a contract with Lessor Ltd, an American company, to lease an explicitly specified Boeing 777 aircraft for a period of 5 years. The aircraft was transported to Cruise Ltd at considerable cost borne by Lessor Ltd from the U.S.A. Lessor Ltd has a large pool of similar aircraft. Due to engine limitations, the contract stipulates that Cruise Ltd can only fly the plane within the Asian continent. Cruise Ltd uses the aircraft to satisfy the needs of its customers and directs the use of the aircraft.

How will Cruise account for the contract in its books in accordance with AASB16 Leases?

Group of answer choices

a.The contract is not a lease as Cruise Ltd does not have the right to control the identified asset.

b.The contract is not a lease as although there is an identified asset, Cruise Ltd does not have right of control as it must fly within the stipulated route in the contract.

c.The contract is not a lease in as there is no identified asset.

d.The contract is a lease as there is control of an identified asset.