DFS: Finance Leases

Hi Guys

I was wondering if someone could help me understand IAS 17 a bit better. The osborne book, page 122, quotes:

"A finance lease is originally recognised in the balance sheet as both an asset and liability. The amount shown will be the lower of the fair value of the asset and the present value of the minimum lease payments."

Supose that the NPV of the lease payments was £10,000 and the asset was worth £9,000. This means you would have to Dr Assets £9k and Cr Liabilities £9k using the above rule. You would then, in years to come, ignor the consistancy and depreciate the asset along with similar assets and gradually reduce the liability using the following double entry: Cr bank, Dr Finance charges and Dr Liability.

BUT here is what i dont get!: Because the liability was understated at the begining of the lease, then towards the end of the lease the Liability will surely go beyond zero?? Any you cant have a libility wih a £1000 Dr balance! What do you do or what have i missunderstood??

Thanks in advance