A customer (manufacturer) has a contract with a supplier (train operator) for the use of 10 specified railway carriages of a particular type (for freight) for a period of 10 years. The customer is only able to use the carriages between Melbourne and Perth, and the types of freight are restricted to those specified in the contract. The contract requires the supplier to allow the carriages to be attached to existing timetabled freight train services it runs between Melbourne and Perth and provide additional engines as and when required.

Which of the following is correct in accordance with AASB 16 Leases?

Group of answer choices

A. The contract for the freight carriages is a lease because the Supplier has control of an identified asset.

B. The contract for the freight carriages is a lease because the Customer has control of an identified asset.

C. The engines are right-of-use leased assets.

D. The contract does not contain a lease because there is no identified asset.