Tyson, Inc. leases a floor in an office complex from Ring, LLC. The lease is for 10 years at an annual payment of $175,000 for years 1 -5 and $240,000 for years 6-10. The Tysons borrowing rate for transaction of similar length is 8.75%. The building has a 25 year economic life. The lease has no option to review and no guarantee of any residual value. The present value of the lease payments does not equal the fair value of leased asset.

Please show all of the J/Es for the initial year to record the lease and related expenses and liability?.

At the end of year 2 what is the account balance of the Right to Use Asset and the Lease Liability?