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:

Height Control Valve

A device in air suspension systems that maintains or adjusts the height of a vehicle by controlling the air flow.

Response Delay Mechanism

A system or feature designed to introduce a deliberate delay in response to inputs or signals, often for safety or control purposes.

Spring Suspension

A type of vehicle suspension that uses springs to absorb shock and maintain contact between the wheels and the road.

U-bolts

Curved bolts shaped like the letter "U" with threaded ends, used to clamp components together, often in automotive or structural applications.