According to Australian Accounting Standards Setting Board, AASB 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligations to make lease payments. A lessee measures right-of-use assets similarly to other non-financial assets (such as property, plant and equipment) and lease liabilities similarly to other financial liabilities. As a consequence, a lessee recognises depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows applying AASB 107 Statement of Cash Flows. Assets and liabilities arising from a lease are initially measured on a present value basis. The measurement includes non-cancellable lease payments (including inflation-linked payments), and also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. AASB 16 contains disclosure requirements for lessees. Lessees will need to apply judgement in deciding upon the information to disclose to meet the objective of providing a basis for users of financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of the lessee. AASB 16 substantially carries forward the lessor accounting requirements in AASB 117 Leases.

Requirements: AASB 16 was released in February 2016 and is applicable to annual reporting periods beginning on or after 1 January 2019. Assume that the Chief Executive Officer (CEO) of an investment company from United States of America (USA) had approached you at KPMG seeking advice on the effects of AASB16 on BHP Billiton Limited and Rio Tinto Limited financial statements for the period 2018 if these firms adopt the new leasing standard early. You are to assume that all aspects of the financial statement will be same as 2017 except the effect of the AASB 16. KPMG is the Auditor for BHP Billiton Limited for the financial year 2017. You are required to take the role of business advisor/Analyst for the purpose of providing a detailed report based on the following specific questions relating to AASB 16 that the investing company is seeking a report for. As an advisor/Analyst at KPMG, write a report addressing the following questions that the CEO of the investment company has asked your firm for advice;

Evaluate whether overall, AASB 16 would result in reporting that would be more useful to users of these companies' financial statements?