High Time Tours leased rock-climbing equipment from AdventuresLeasing on January 1, 2018. High Time...

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Accounting

High Time Tours leased rock-climbing equipment from AdventuresLeasing on January 1, 2018. High Time has the option to renew thelease at the end of two years for an additional three years for$8,000 per quarter. Adventures purchased the equipment at a cost of$198,375.(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 andPVAD of $1) (Use appropriate factor(s) from the tablesprovided.)
Related Information:
Lease term
2 years (8 quarterly periods)
Lease renewal option for an additional
3 years at $8,000 per quarter
Quarterly lease payments
$15,000 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, andDec. 31 thereafter.
Economic life of asset
5 years
Interest rate charged by the lessor
8%
Record the beginning of the lease for HighTime.                                  DR        CR
Record the lease payment for HighTime.                                               DR         CR
Record the lease and interest payment for High Time                                 DR         CR
Record the amortization of right-to-use asset for High Time.                     DR         CR

Answer & Explanation Solved by verified expert

4.5 Ratings (768 Votes)

Since there is a renewal option after 2 years of lease and the renewal rate of lease is significantly lower than current rate so there is chances of lease renewal and lease term will See Answer

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Transcribed Image Text

In: AccountingHigh Time Tours leased rock-climbing equipment from AdventuresLeasing on January 1, 2018. High Time has...High Time Tours leased rock-climbing equipment from AdventuresLeasing on January 1, 2018. High Time has the option to renew thelease at the end of two years for an additional three years for$8,000 per quarter. Adventures purchased the equipment at a cost of$198,375.(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 andPVAD of $1) (Use appropriate factor(s) from the tablesprovided.)Related Information:Lease term2 years (8 quarterly periods)Lease renewal option for an additional3 years at $8,000 per quarterQuarterly lease payments$15,000 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, andDec. 31 thereafter.Economic life of asset5 yearsInterest rate charged by the lessor8%Record the beginning of the lease for HighTime. DR CRRecord the lease payment for HighTime. DR CRRecord the lease and interest payment for High Time DR CRRecord the amortization of right-to-use asset for High Time. DR CR

Related Information:
Lease term	2 years (8 quarterly periods)
Lease renewal option for an additional	3 years at $8,000 per quarter
Quarterly lease payments	$15,000 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, andDec. 31 thereafter.
Economic life of asset	5 years
Interest rate charged by the lessor	8%