There have been recent and major changes in how we account for leases, with a new accounting standard on leasing having been released by the IASB in January 2016, this being IFRS 16 Leases. This was subsequently followed by the release in Australia of AASB 16 Leases in February 2016.

According to IASB (2016a), the implementation of IFRS 16 is expected to improve comparability between companies that lease assets and companies that borrow to buy assets, and create a more level playing field in providing transparent information about leases to all market participants.

1. Provide explanation for the above views.
2. Explain whether the Right-of-use asset (lease asset) and the associated lease liability under the new leasing standards IFRS 16 / AASB 16 meet the definition and recognition criteria contained in the AASB/ IASB Conceptual Framework for Financial Reporting?