In 2019 AASB 16 the Leasing standard changed. You are required to research the implications of the AASB 16 standard in terms of the questions below (maximum 400 words). Make sure you reference any material used in your answer and include the reference list at the end of your answer. a. Describe major changes to be adopted under standard AASB16 in terms of agreements that meet the definition of a lease? For example what key evaluations will need to be made in order to apply the definition? 3 marks b. Which businesses will be affected under AASB16? 3 marks c. Are there any exceptions from lease accounting? For example will hire purchases agreements and rights held under licencing agreements such as motion picture films, patents and copyrights be caught by AASB16? 3 marks d. What are the impacts of AASB 16 in terms of how leases are reported on the Income Statement and Balance Sheet? 3 marks B. Determine for each of the following arrangements the manner in which the relevant lease should be classified by the lessor according to IFRS 16/AASB 16. Give reasons for your answers. (i) Company A enters into a non-cancellable lease for machinery with a term of 8 years. The machinery has a useful economic life of 12 years. Company A as an option to renew the lease with the same rental for a further four years, even though market rentals are expected to increase with inflation over the next decade. The present value of the lease payments is 70% of the fair value of the machinery. 4 marks (ii) Company B enters into a non-cancellable lease with a 7 year term for an item of plant which has a useful life of 10 years. The present value of future lease payments is equal to 75% of the fair value of the asset at the date of inception of the lease. The residual value accounts for the remaining 25%. So confident is the lessor that the plant will retain its value that it is guaranteeing 50% of the residual value, with the lessee being responsible for guaranteeing the remaining 50% of the residual value.