On January 1, 2018, the Danelle Company leased a portion of the commercial building owned by Joseph Commercial Company. The lease expires on December 31, 2025. Extensive work was done on the leased property for the construction of a restaurant considered as covid-19 safe. The improvements, costing P1,344,000, were completed on March 31, 2018. The estimated useful life of the improvement was 10 years. During 2021, because of favorable business operations in the area, Danelle negotiated for the extension of the lease term by an additional 3 years, ending on December 31, 2028. Danelle Company provides full year depreciation during the year of acquisition and no depreciation in the year of disposal. How much is the depreciation expense on the leasehold improvements for the year ended December 31, 2021?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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23.On January 1, 2018, the Danelle Company leased a portion of the commercial building owned by Joseph Commercial Company. The lease expires on December 31, 2025. Extensive work was done on the leased property for the construction of a restaurant considered as covid-19 safe. The improvements, costing P1,344,000, were completed on March 31, 2018. The estimated useful life of the improvement was 10 years.

During 2021, because of favorable business operations in the area, Danelle negotiated for the extension of the lease term by an additional 3 years, ending on December 31, 2028.

Danelle Company provides full year depreciation during the year of acquisition and no depreciation in the year of disposal.

How much is the depreciation expense on the leasehold improvements for the year ended December 31, 2021?
 
a. 120,000
b. 105,000
c. 168,000
d. 186,000
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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