Leoni Ltd has entered into Two agreements as identified below:

Agreement 1

Leoni Ltd has signed a contract to lease a truck for a non-cancellable term of 12 months. There is an option to extend the lease for another 12 months. The lease payments in this additional period are to be at usual market rates.

Agreement 2

Leoni Ltd has signed a contract to lease machinery for a non-cancellable period of 11 months.

There is an option to extend the lease for another 13 months, with the monthly payments in this additional 13-month period being 80 per cent of normal market rates.

REQUIRED

What is the 'lease term' in each of the above agreements?

Question 2 AASB 139 includes reference to 'hedging instrument' and 'hedged item'. Carefully define these terms and provide an example of each.