PROBLEM K: On January 1, 2016, Revolver Co. signed an eight-year lease for office space. The entity has the option to renew the lease for an additional four-year period on or before January 1, 2023. During January 2018, the entity made general improvement to the premises costing P3,600,000 and having an estimated useful life of 10 years. On December 31, 2018, the entity's intention as to exercise of the renewal option is uncertain because this will depend upon future office space requirement. A full year depreciation expense is taken for the current year. 16. What amount should be recorded as depreciation of leasehold improvement for the year 2018? A. 300,000 B. 360,000 C. 450,000 D. 600,000 17. Which of the following is not a characteristic of property, plant, and equipment? A. The property, plant, and equipment are tangible assets. B. The property, plant, and equipment are used in business operations. C. The property, plant, and equipment are expected to be used over a period of more than one year. D. The property, plant, and equipment are subject to depreciation. 18. In which of the following situations is the production method of depreciation most appropriate? A. An asset's service potential declines with use. B. An asset's service potential declines with the passage of time. C. An asset is subject to rapid obsolescence. D. An asset incurs increasing repairs and maintenance with use