Keystone, Inc., replaced its truck-and-dolley system of moving invenome around its plant with a computer-controlled conveyor system. The costs associated with this equipment replacement were as follows:

The truck-and-dolley system was sold for scrap for \($60,000\). What value should be capitalized to the balance sheet of Keystone, Inc., as the cost basis of the new conveyor system? Why?

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Purchase price of conveyor system.. Book value of truck-and-dolley system. Installation cost of new conveyor system $1,200,000 40,000 75,000