QUESTION 3

(iii) When a lessee incurs initial direct costs in establishing a lease agreement, how are these costs to be accounted for? [30 word limit answer]

(iv) Why does NZ IFRS 16 Leases allow exemptions, from capitalising lease assets and lease liabilities, to a lessee?[150 words limit answer]

(v) Why should the carrying amount of a lease asset typically reduce more quickly than the carrying amount of a lease liability? [150 words limit answer]

(Total marks for Question 3: 15 marks)