Nature of depreciation Obj. 2 Tri-City Ironworks Co. reported $65,500,000 for equipment and $33,415,000 for accumulated depreciation—

equipment on its balance sheet.

Does this mean

(a) that the replacement cost of the equipment is $65,500,000 and

(b) that

$33,415,000 is set aside in a special fund for the replacement of the equipment? Explain.

AppendixLO1