reassessing lease liability

sir i find this question important from the exam point of view, but at the same time its equally challenging!

On 1 January 20X1, Kingfisher enters into a four year lease of property with annual lease payments of $1 million, payable at the END of each year. According to the contract, lease payments will increase every year on the basis of the increase in the Consumer Price Index for the preceding 12 months. The Consumer Price Index at the commencement date is 125. The interest rate implicit in the lease is not readily determinable. Kingfisher’s incremental borrowing rate is 5 per cent per year.
At the beginning of the second year of the lease the Consumer Price Index is 140.

Discuss how the lease will be accounted for on the first day of the second year of the contract.

sir so in this case initially we will value the variable lease payments using the index rate at the COMMENCEMENT of the lease, so PV of future lease payments will be (1-1.05^-4)/.05 x1=3.54m.
Dr. ROUA 3.54m
CR lease liability 3.54m

throughout the yr 1 lease ability will increase by 3.54×5%=0.17. giving total of 3.71m without deduction of lease payment.

on the beginning of the second yr, PV of lease payments will be 1.12+1.12x(1-1.05^-3)/.05=4.17m

so sir now increase in ROUA and lease liability will be 4.17-3.71=0.46m, am i correct sir?