Question

Machine cost ₹50 lakh depreciated SLM over 10 years;

after 5 years, component worth ₹10 lakh replaced at ₹12 lakh. Accounting treatment?

A Debit repair expense ₹12 lakh

B Capitalise ₹12 lakh, derecognise WDV of replaced component

C Capitalise ₹12 lakh, don't touch WDV

D Expense ₹10 lakh, capitalise ₹2 lakh

E Ignore component accounting

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