GMC plc entered into a lease for a machine on 1 January 2010 for a 5-year period. Annual rentals paid at the end of each year are 500,000. The cost of capital for discounting purpose is 10% per annum. Flower plc normally depreciates similar machines using the straight-line method over a 10-year period with no residual value at the end of their useful economic lives. Answer the following questions : 1. Explain and show how the above lease should be accounted for in accordance with IFRS 16 Leases for years ended (2010, 2011, 2012, 2013 and 2014). 2. What are the implications of the revised standard IFRS 16 Leases' on accountants' ability to apply judgement? What difference does this make to the interpretation of a company's financial statements? illustrate your answer with real world examples. GMC plc entered into a lease for a machine on 1 January 2010 for a 5-year period. Annual rentals paid at the end of each year are 500,000. The cost of capital for discounting purpose is 10% per annum. Flower plc normally depreciates similar machines using the straight-line method over a 10-year period with no residual value at the end of their useful economic lives. Answer the following questions : 1. Explain and show how the above lease should be accounted for in accordance with IFRS 16 Leases for years ended (2010, 2011, 2012, 2013 and 2014). 2. What are the implications of the revised standard IFRS 16 Leases' on accountants' ability to apply judgement? What difference does this make to the interpretation of a company's financial statements? illustrate your answer with real world examples