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Parkville Ltd (customer) enters into a 10-year contract with Clayton Ltd (supplier) for the right...

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Accounting

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Parkville Ltd (customer) enters into a 10-year contract with Clayton Ltd (supplier) for the right to use a specified amount of capacity within a cable connecting Brisbane to Melbourne. The specified amount of capacity is equivalent to one third of the full capacity within the cable. Data transmission follows a pre-determined schedule. The supplier determines which fibres are used to transmit the data. The supplier is also responsible for repair and maintenance of the cable. Required: Using the framework provided by AASB 16 Leases, explain why the above contract should or should not be treated as a lease contract. (4 marks) Enter your answer here

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