Question on Sale and Leaseback – Example 7

Dear Sir,

In the answer for Example 7 part i) where in substance no sale has taken place and we initially recognise a Financial Liability amount equal to the sales proceeds of $10m, what about the interest component in the subsequent measurements? Lease term is for 10 years and lease payment is $1M per annum, by using amortised cost accounting, by the end of the 10 years the Financial Liability would not be Nil due to interest.

Thanks in advance for your guidance.