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On October 1, 2018, Wickham Auto Rentals purchases a new automobile for $29500 to add to its fleet of rental cars. The automobiles are rented
On October 1, 2018, Wickham Auto Rentals purchases a new automobile for $29500 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 7000 km in 2018 and 40000 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
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