5. Accounting for Lease Agreement-Lessee (20 points) Newcastle Sales and Service entered into a lease agreement to lease a fleet of six vehicles from Porto Motors. The term of the lease is six years and Newcastle makes annual payments of $30,000 per year beginning on 1 January 2021 (and then every 31 December through 31 December 2025). 1 January 2021 is also the lease commencement date. Newcastle does not guarantee any residual value in the lease agreement. Newcastle received $6,000 on 1 January 2021 as an incentive to sign the lease agreement and incurred initial direct costs in 2020 of $2,500 related to the lease that were recorded as prepaid assets. The estimated economic life of the vehicles is ten years and their fair value at lease commencement is $200,000. Newcastle is unaware of Porto's implicit rate, but Newcastle's incremental borrowing rate is 6% per year. There is no transfer of ownership at the end of the lease, nor is there a purchase option. The vehicles are not of a specialized nature. Required: a. What type of lease has Newcastle signed? Explain in terms of ASC 842. (2 pts) b. Prepare all 2021 and 2022 journal entries for Newcastle. (15 pts) c. Prepare all 2026 journal entries for Newcastle. (3 pts)