CM Replaced a Major Component in Plant a Which Has

question 100

Essay

CM replaced a major component in Plant A which has been operating 20 years and has a 30-year estimated useful life. The new replacement component cost $150,000 cash. When the plant was constructed, the old component cost $60,000. Give the entry (or entries) to record this transaction.

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Definitions:

Money Market

A section of the financial market where short-term financial assets with high liquidity are traded.

Interest Rate

The amount charged by lenders as a percentage of the principal, or the amount earned on deposits over a specified period.

Equilibrium Value

The point at which the quantity of a good or service demanded equals the quantity supplied, resulting in market stability.

Opportunity Cost

Whatever must be given up to obtain some item.