Question $1$

Leve liably

Entity L

into a lease for $10$ years, with a single lease payment payable at the beginning of

$$

year. The initial lease payment is $1,00,000.$ Lease payments will increase by the rate of LIBOR each

year. At the date of commencement of the lease, LIBOR is $2$ per cent.

Assume that the interest rate implicit in the lease is $5$ per cent. How lease liability is initially measured?

Answer