Phoenix Agency Leases Office Space for $7,000 Per Month

Multiple Choice

Phoenix Agency leases office space for $7,000 per month. On January 3, Phoenix incurs $65,000 to improve the leased office space. These improvements are expected to yield benefits for 8 years. Phoenix has 5 years remaining on its lease. Compute the amount of expense that should be recorded the first year related to the improvements.

A) $65,000.
B) $8,125.
C) $6,000.
D) $20,000.
E) $13,000.