a)Discuss whether the following scenario constitutes a lease that falls under the ambit of AASB 16/IFRS 16 Leases. Explain why or why not.

Entity A enters into a contract with Entity B whereby Entity B will provide a Desna Falcon two-seater airplane for Entity A to use over the next five years in return for $50,000 per annum paid in advance by Entity A. Initially, Entity A will select the airplane from a large pool of Desna Falcons owned by Entity B.

Entity B is under an obligation to ensure the aircraft selected by Entity A remains in an airworthy condition. Consequently, the aircraft chosen will remain in a hangar owned by Entity B where it will be maintained by Entity Bs staff. Ordinarily, Entity B charges $5,000 per annum to hangar a Desna Falcon and maintain it in an airworthy condition.

Entity B can substitute the airplane selected by Entity A for another Desna Falcon at anytime over the next five years without Entity As consent. The contract stipulates that a substitute aircraft supplied by Entity B must have a current Certificate of Airworthiness issued by the Civil Aviation Safety Authority.