Every Three Years a Major Component (Part #45)in a Machine

question 22

Essay

Every three years a major component (part #45)in a machine must be replaced. By doing this regular but expensive repair the machine can be used for 15 years. If Part #45 were not replaced, the machine could be used only for a maximum of six years. When the machine was originally purchased for $5,000,000 it was set up as one asset and depreciated over its estimated useful life of 15 years. Recently this repair was completed at a cost of $700,000 for Part #45. The earlier Part #45 cost $550,000 when it was installed three years ago. Neither the old nor the new Part #45 has any residual value.
Prepare the necessary journal entry to record the transaction. Provide a short justification for your chosen treatment.

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Definitions:

Pons

Portion of the brain stem above the medulla oblongata and below the midbrain; assists the medulla oblongata in regulating the breathing rate.

Medulla

An inner region or core in various structures, often used to refer to the medulla oblongata, a part of the brainstem that controls vital functions.

Brain Stem

In mammals, portion of the brain consisting of the medulla oblongata, pons, and midbrain.

Ability to Taste

The sensory function that enables an organism to detect and identify different flavors, facilitated by taste buds on the tongue.