AASB 16 Leases 9-11,B9-B31: Assess at inception whether a contract is, or holds, a lease: an identified asset with no substantive supplier substitution right, and the customer's right to substantially all economic benefits and to direct its use

What does 9-11,B9-B31 require?

At inception the entity decides whether the contract gives the customer control over how an identified asset is used for a period (which may be stated in units of use) in exchange for consideration, and revisits that judgement only when the terms change. An asset is identified when explicitly or implicitly specified, or when it is a physically distinct portion, but not when the supplier has a substantive right to substitute it throughout the period of use (practical ability to substitute and an economic benefit from doing so, with the customer presumed not to know otherwise when it cannot readily determine this). Control exists when the customer obtains substantially all the economic benefits from use within the defined scope and decides how the asset is used and to what end, or those decisions are predetermined and the customer operates the asset or designed it; supplier rights that merely protect its interest do not prevent control. Portfolio application is allowed where results would not differ materially.