LePalmette ple is a water sports centre that offers boat tours and lessons in stand-up paddle- boarding with a financial year-end on 31st March. On 1st April 2018 it entered into a non- cancellable agreement with Surf plc to lease a boat that has an estimated economic life of seven years. The lease period is six years at which point the boat will be returned to Surfplc. Under the terms of the lease, LePalmette plc is expected to make twelve half-yearly payments of 15,000 in advance, commencing on 1st April 2018, and to pay for all maintenance and insurance costs relating to the boat. LePalmette plc has the exclusive right to use the boat and the right to direct how and for what purpose the boat is used for the duration of the contract. The boat is expected to have a nil residual value at the end of its economic life. The interest rate implicit in the lease is 8% per half year. The boat is depreciated using straight-line depreciation applied on a strict time basis. Its fair value on 1st April 2018 was 122,000. On 1st May 2018, LePalmette plc also leased stand-up paddleboards from PRL. The lease rental is for six months, with a market value of 10,000 and an estimated useful life of five years. The lease agreement can be terminated by either party giving a one-month period of notice. Under this lease, PRL will be responsible for repair and maintenance of the stand-up paddleboards. LePalmette plc will make payments of 150 at the end of each month for the rental fee for the paddleboards. Required: (a) Explain why these leases fall within the scope of IFRS 16, Leases, assuming that LePalmette ple elects to adopt the exempted accounting treatment when possible. Prepare extracts of LePalmette ple's Statement of Comprehensive Income and Statement of Financial Position for the years ended from 31st March 2019 to 31st March 2021 in accordance with the extant accounting standards and practice. [LePalmette ple has also adopted early implementation of IFRS 16 and now reports all leases under the requirements of this standard. The accounting policy notes and disclosure notes are not required. Clearly show your workings and state any assumptions you have made.) (18 Marks) (b) Illustrate the main differences between lease accounting treatments under IAS 17, Leases and under IFRS 16, Leases? (7 Marks) LePalmette ple is a water sports centre that offers boat tours and lessons in stand-up paddle- boarding with a financial year-end on 31st March. On 1st April 2018 it entered into a non- cancellable agreement with Surf plc to lease a boat that has an estimated economic life of seven years. The lease period is six years at which point the boat will be returned to Surfplc. Under the terms of the lease, LePalmette plc is expected to make twelve half-yearly payments of 15,000 in advance, commencing on 1st April 2018, and to pay for all maintenance and insurance costs relating to the boat. LePalmette plc has the exclusive right to use the boat and the right to direct how and for what purpose the boat is used for the duration of the contract. The boat is expected to have a nil residual value at the end of its economic life. The interest rate implicit in the lease is 8% per half year. The boat is depreciated using straight-line depreciation applied on a strict time basis. Its fair value on 1st April 2018 was 122,000. On 1st May 2018, LePalmette plc also leased stand-up paddleboards from PRL. The lease rental is for six months, with a market value of 10,000 and an estimated useful life of five years. The lease agreement can be terminated by either party giving a one-month period of notice. Under this lease, PRL will be responsible for repair and maintenance of the stand-up paddleboards. LePalmette plc will make payments of 150 at the end of each month for the rental fee for the paddleboards. Required: (a) Explain why these leases fall within the scope of IFRS 16, Leases, assuming that LePalmette ple elects to adopt the exempted accounting treatment when possible. Prepare extracts of LePalmette ple's Statement of Comprehensive Income and Statement of Financial Position for the years ended from 31st March 2019 to 31st March 2021 in accordance with the extant accounting standards and practice. [LePalmette ple has also adopted early implementation of IFRS 16 and now reports all leases under the requirements of this standard. The accounting policy notes and disclosure notes are not required. Clearly show your workings and state any assumptions you have made.) (18 Marks) (b) Illustrate the main differences between lease accounting treatments under IAS 17, Leases and under IFRS 16, Leases? (7 Marks)