**(a) Initial lease liability: $102,504.94**  
**(b) Initial right-of-use asset: $102,504.94**  

**Accounting standard: AASB 16**

**Working**  
The lease liability is measured as the present value of the five end-of-year payments of $25,000 discounted at 7 %:

\[
PV = 25{,}000 \times \frac{1-(1.07)^{-5}}{0.07}
\]

\[
(1.07)^5 = 1.4025517307 \implies (1.07)^{-5} = 0.7129861795
\]

\[
\frac{1-0.7129861795}{0.07} = 4.1001974357
\]

\[
25{,}000 \times 4.1001974357 = 102{,}504.9359 \approx 102{,}504.94
\]

(Equivalently, summing the individual discounted cash flows yields the same rounded result.)

Because there are no initial direct costs, lease incentives, prepaid payments or restoration obligations, the right-of-use asset is recognised at an amount equal to the initial lease liability.

Both measurements are required by AASB 16 *Leases*.