EX 9-7 Nature of depreciation

Tri-City Ironworks Co. reported $44,500,000 for equipment and $29,800,000 for accumulated depreciation-equipment on its balance. sheet.

Does this mean (a) that the replacement cost of the equipment is $44,500,000 and (b) that $29,800,000 is set aside in a special fund for the replcement of the equipment? Explain.