IFRS16 Leases which was effective from 1 January 2019 introduced significant changes from IAS17 which it supersedes.

a) Give a brief overview of those changes and why they were felt to be necessary. (6 marks)

b) Under IFRS 16, the Lucas Company will now be classifying its leases as finance leases rather than operating ones for its year ended 31 December 2019. Explain the impact this will have on the Lucas Companys key financial statements and on its key ratios. (6 marks) Total: 12 marks Word limit: 250 words