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

question 43

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 two components: the machine was depreciated over its estimated useful life of 15 years and Part #45 was recognized as a separate PPE asset and depreciated over three 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 entries to record the transaction. Provide a short justification for your chosen treatment.

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Definitions:

Morphemes

The smallest units of language that carry meaning or function, such as roots, prefixes, and suffixes.

Receptive Vocabulary

The stock of words a person can understand in spoken or written language, as opposed to the words they can actively use.

Productive Vocabulary

The set of words a person can actively use in speech or writing, reflecting one part of language competence.

Semantics

The study of meaning in language, including the analysis of the ways in which words, phrases, and sentences communicate information.