This report delves into the transition from AASB 117 to the new AASB 16 lease accounting standard. It begins by outlining the rationale behind the replacement, emphasizing the limitations of the previous standard in providing a comprehensive view of a company's liabilities, particularly concerning off-balance-sheet operating leases. The report then explores the significance of contracts within leasing agreements under AASB 16, highlighting the importance of determining whether a contract contains a lease. It details the three key evaluations used to make this determination, including the identification of assets, the customer's ability to obtain economic benefits, and the customer's right to direct the use of the asset. Finally, the report examines the impact of substantive substitution rights on lease agreements, clarifying how these rights affect the classification and accounting treatment of leases. The report provides a detailed analysis of the new lease standard including financial reporting implications, contract significance, and the impact of substantive substitution rights.