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Under a contract between a local government authority (MBSJ) and a private sector provider (One Sdn Bhd), One Sdn Bhd provides MBSJ with 20 trucks

Under a contract between a local government authority (MBSJ) and a private sector provider (One Sdn Bhd), One Sdn Bhd provides MBSJ with 20 trucks to be used for refuse collection on behalf of MBSJ for a 10-year period. The trucks, which are owned by One Sdn Bhd, are specified in the contract. MBSJ determines how they are used in the refuse collection process. When the trucks are not in use, they are kept at MBSJs premises. MBSJ can use the trucks for another purposes if it so chooses. If a particular truck needs to be serviced or repaired, One Sdn Bhd is required to substitute a truck of the same type. Otherwise, and other than on default by MBSJ, One Sdn Bhd cannot retrieve the trucks during the 10-year period. Required: Explain whether the contract entered by MBSJ and One Sdn Bhd is considered a lease in accordance to MFRS 16 Leases.

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