karoliukas

bdgrdk, with finance leases, it makes a difference if the payments happen in arrears (at the end of the period) or in advance (at the beginning). The scenario on pg 77 is an example of in arrears payments (at the end of the year).
So you basically need to analyse what happens to the lease chronologically:
opening balance: 1,000
interest expense: 1,000 x 10% = 100 (interest accrues on the opening balance, which remains upaid for the duration of the year)
lease payment: 264
closing balance: 1,000 + 100 - 264 = 836
If we were told that payments are made at the beginning of each year (in advance), we would have:
opening balance: 1,000
lease payment: 264
interest expense: (1,000 - 264) x 10% = 73.6 (interest accrues on the opening balance adjusted for the payment which happens at the very start of the year)
closing balance: 1,000 - 264 + 73.6 = 809.6