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(B) five years; or

(C) 12 years.

(3) The permissible useful lives of buildings are

(A) 15 years;

(B) 20 years;

(C) 35 years; or

(D) 45 years.

(4) The permissible useful lives of improvements, mobile homes, or modular buildings for which the Alaska division of motor vehicles has issued a title are:

(A) eight years;

(B) 10 years;

(C) 15 years; or

(D) 25 years. (d) For each month, a grantee shall calculate the use cost of an asset by

(1) subtracting an amount from the basis of the asset that is equal to the sum of the principal amounts, on the last day of the month, of all loans that were used to purchase the asset or for which the asset is pledged as collateral;

(2) multiplying the remainder times six and two-thirds percent; and

(3) dividing the product by 12. (e) A grantee shall calculate capital costs for all items within a single class of assets using either the depreciation or the use allowance method. A grantee may not use both methods for a single class of assets. The department will accept classifications of assets according to similar uses, life expectancy, and treatment under the United States Internal Revenue Code. Classes of assets must separate buildings, computer equipment, office equipment, and vehicles. (f) A grantee shall calculate the yearly capital cost of all component parts of a building by the same method and the same useful life as that the grantee uses for the building. A grantee may calculate the yearly capital cost of fixtures by a different method than the method by which the grantee calculates the costs for a building in which the fixtures are located. (g) If a grantee has reported the yearly capital cost of an asset to the department as a use cost or as depreciation cost, the grantee may not change that characterization of the cost in any subsequent report to the department. (h) The department will not reimburse a grantee for a depreciation or use allowance cost of