1. Lessee enters into a fiveyear lease of office space on January 1, and concludes that the agreement is an operating lease. Lessee pays initial direct costs of $5,000. The agreement provides the following: Lease term Five years, with the first payment due at the end of each year Annual payments, beginning at the Year 1 $25,000 end of the year and annually Year 2 $26,000 thereafter Year 3 $27,000 Year 4 -- $28,000 Year 5 -- $29,000 3. Determine the present value of lease payments b. Lessee follows ASC 842 to account for the lease. Prepare the required entries at 1) commencement of the lease and 2) at each year-end to record the lease cost, lease payment and properly state the lease liability and ROU asset. Show supporting computations. c. Prepare taccounts for the Lease Liability and ROU Asset accounts. Post the above journal entries and show that the balance is zero at the end of the lease term