Realco installed a new heating system in its building in 2011 that it expected to last 20 years. To keep the system in efficient operating condition, it cleans the entire system at an annual cost of $1,000. In 2014, Realco had to replace a pipe that was a major structural component of the system at a cost of $10,000. In 2020, it incurred a system cleaning expense of $1,000 and an additional cost of $10,000 to replace the pipe yet again. Realco was reassured by the manufacturer that the replacement pipe would last 20 years and that the prior pipe replacements were entirely unexpected. How should Realco treat its expenditures for 2020?

a. Capitalize the entire cost of $11,000 b. Expense the entire cost of $11,000 c. Capitalize the $10,000 for the pipe replacement and expense the $1,000 for annual cleaning d. Expense the $10,000 for the pipe replacement and capitalize the $1,000 for annual cleaning e. Capitalize $5,500 and expense $5,500