On October 1, 2018, Wickham Auto Rentals purchases a new automobile for $30500 to add to its fleet of rental cars. The automobiles are rented out on a short-term basis with rental fees calculated based on distance driven by the customer. Wickham's policy is to replace their vehicles after the earlier of 3 years or 75,000 km driven. One particular car was driven 7600 km in 2018 and 38800 in 2019. Salvage value is expected to be $12600. Wickham Auto Rentals has a December 31 year end.

Instructions

A) Calculate 2018 and 2019 amortization expense under each of the following methods:

1. Straight-line
2. Declining-balance using a 40% rate
3. Units-of-activity

B) Which method will best achieve the goal of matching expenses with revenue? Explain.