Finance leases

Urthona26

I don't understand how finance leases are accounted for. In the textbook, it says you have to split the lease payment into a finance charge and a capital payment, and that "the finance charge is to be such that it gives a constant rate of interest on the balance of the liability" (i.e. on the capital payment). But this isn't enough information to decide what the finance charges should be. I could pick whatever rate of interest I want. I could pick 10% interest and the finance charge would be one figure. I could pick 15% interest and it would be something else.

It is suggested somewhere that the first finance charge must be whatever the interest rate is multiplied by the lease obligation at the start of the year, which I suppose would be enough information? It isn't really made clear though.