On January 1, Year 1, Nobb Corp. signed a 12-year lease for warehouse space. Nobb has an option to renew the lease for an additional 8-year period on or before January 1, Year 5. During January Year 3, Nobb made substantial improvements to the warehouse. The cost of these improvements was $540,000, with an estimated useful life of 15 years. At December 31, Year 3, Nobb is reasonably certain to exercise the renewal option. Nobb has taken a full year's amortization on this leasehold. In Nobb's December 31, Year 3, balance sheet, the carrying amount of this leasehold improvement should be $513,000 $510,000 $486,000 $504,000