Mini-bus Rentals Ltd has a fleet of 36 mini-buses that customers can hire for self-drive tours and other transportation needs. The mini-buses cost between $120000 and $160 000 each and have a useful life of 12 years. Tyres are replaced after 40 000 km, which is approximately every two years for most vehicles in the fleet. The cost of replacing tyres is $2 000 per vehicle. The bookkeeper had been studying accrual accounting and though it would be a good idea to accrue maintenance expenses for the replacement of tyres. On30 June 20X6 he observed that the tyres on 9 vehicles were due for replacement, which was expected to occur within six months after the reporting period.
