The Palmer Corporation replaced the air conditioning system in one of its office buildings that it leases to tenants. The cost of the old air conditioning system, $200,000, is included in the cost of the building. However, the company has separately depreciated the air conditioning system. Depreciation recorded up to the date of replacement totaled $160,000. The old system was removed and the new system installed at a cost of $230,000, which was paid in cash. Parts from the old system were sold for $12,000. Companies can choose one of three methods to record the cost of improvements: substitution (method 1), capitalization of new cost (method 2), reduction of accumulated depreciation (method 3). Which of the following statements is incorrect? Under both methods 2 and 3, the book value of buildings will be increased by $218,000. The company should debit $218,000 to accumulated depreciation if it uses method 3. The company should debit $160,000 to accumulated depreciation if it uses method 1. The company should