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Maxs Grill leases space from Venture Real Estate. The terms of the non-renewable, four-year lease require Max to pay $5,000/month of rent. Max remodels the

Maxs Grill leases space from Venture Real Estate. The terms of the non-renewable, four-year lease require Max to pay $5,000/month of rent. Max remodels the building by installing new non-removable flooring (a leasehold improvement) at a cost of $100,000. The flooring has an estimated useful life of 10 years with no salvage value. Max utilizes straight-line depreciation.

What depreciation expense should Max record for the floorings first full year?

Multiple Choice

  • $60,000

  • $5,000

  • $25,000

  • $10,000

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