Rose (customer) has signed a contract with Carnation (supplier). For a period of five years, Carnation is to supply Rose with 10 cars of a particular type. The contract specifies the 10 cars all of which are owned by Carnation. Carnation is required to substitute a car of the same type should a particular car need to be serviced or to be repaired, but otherwise has no rights to retrieve a car from Rose over the five-year contract. Rose has the right to determine how the cars are used (i.e., where they are driven, when they are driven, and the purpose of any trips). The cars are kept at Roses premises when not in use.

Rose is identifying whether the contract gives rise to a lease in accordance with AASB 16 Leases.

Required:

Which of the following statements is NOT correct?

	A.	The right of Carnation to substitute cars being serviced or repaired amounts to substantive substitution and so the contract does not contain a lease.
	B.	The contract conveys the right to control the use of identified assets for a period of time.
	C.	Rose has the right to obtain substantially all of the economic benefits from the use of the cars over the five-year period of use.
	D.	Rose has the right to control the use of the 10 cars because Rose will obtain substantially all of the economic benefits from the use of the cars over the five-year period of use and Rose has the right to direct the use of the cars.