Determining the Cost of an Asset Keystone, Inc., replaced its truck-and-dolley system of moving inventory around its plant with a computer-controlled conveyor system. The costs associated with this equipment replacement were as follows: Purchase price of conveyor system $1,000,000 Book value of truck-and-dolley system 25,000 Installation cost of new conveyor system 60,000 The truck-and-dolley system was sold for scrap for $45,000.

What value should be capitalized to the balance sheet of Keystone, Inc., as the cost basis of the new conveyor system?

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