=+E7-6 Nature ofdepreciation Obj 2 Armored Metal Co. reported $975,600 for equipment and $600,000 for accumulated deprecia¬

tion-equipment on its balance sheet.

Does this mean

(a) that the replacement cost ofthe equipment is $975,600 and

(b) that

$600,000 is set aside in a special fund for the replacement ofthe equipment? Explain.