be located at any one of several boarding areas within the airport. Supplier has the right to change the location of the space allocated to Customer at any time during the period of use. There are minimal costs to Supplier associated with changing the space for the Customer: Customer uses a kiosk (that it owns) that can be moved easilyto sell its goods. There are many areas in the airport that are available and that would meet the specifications for the space in the contract (Illustrative example 2).2.Customer enters into a 15-year contract with Supplier for the right to use a specified amount of capacity within a cable connecting Hong Kong to Tokyo. The specified amount is equivalent to Customer having the use of the full capacity of three fibre strands within the cable (the cable contains 15 fibres with similar capacities). Suppliermakes decisions about the transmission of data (ie Supplier lights the fibres, makes decisions about which fibres areused to transmit Customer’s traffic and makes decisions about the electronic equipment that Supplier owns and connects to the fibres) (Illustrative example3B).3.Customer enters into a contract with a property owner (Supplier) to use Retail Unit A for a five-year period.Retail Unit A is part of a larger retail space with many retail units. Customer is granted the right to use Retail Unit A. Supplier can require Customer to relocate to another retail unit. In that case, Supplier is required to provide Customer with a retail unit of similar quality and specifications to Retail Unit A and to pay for Customer’s relocation costs. Supplier would benefit economically from relocating Customer only if a major new tenant were to decide to occupy a large amount of retail space at a rate sufficiently favourable to cover the costs of relocating Customer and other tenants in the retail space. However, although it is possible that those circumstances will arise, at inception of the contract, it is not likely that those circumstances will arise. The contract requires Customer to use Retail Unit A to operate its well-known store brand to sell its goods during the hours that the larger retail space is open. Customer makes all of the decisions about the use of the retail unit during the period of use. For example, Customerdecides on the mix of goods sold from the unit, the pricing of the goods sold and the quantities of inventory held. Customer also controls physical access to the unit throughout the five-year period of use. The contract requires Customer to make fixed payments to Supplier, as well as variable payments that are a percentage of sales from 7
Part 6: Chapter 1 – Leases (IFRS 16)Retail Unit A. Supplier provides cleaning and security services, as well as advertising services, as part of the contract.(Illustrative example 4)?
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- Summer '17
- K B
- Lessee, Finance lease