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Furniture and fixtures, equipment and leasehold improvements are stated at cost. Depreciation of furniture and fixtures and equipment is computed using the straight-line method over estimated useful lives that range from two to ten years. Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or the term of the related leases.
So the building depreciates at the rate of 2 percent per year because of physical deterioration. Just in case you get thrown a question with a different total economic life, say 40 years, the calculation would be 1/40. If you divide 1 by 40 you get 2.5 percent.