On January 2, 2019, Yuki Yogurt Company decided to replace its obsolete refrigeration system with a more efficient one. The old system had a book value of $9,000 and a fair value of $1,000. Yuki’s new refrigeration system has a fair value of $190,000, for which Yuki paid $189,000 after permitting the contractor to keep the old refrigeration equipment. How much should Yuki capitalize as the cost of the new refrigeration system?
a. $189,000
b. $190,000
c. $197,000
d. $198,000