E10.17 (LO 2) (Component Depreciation) Presented below are the components related to an office block that Veenman NV is considering purchasing for €10,000,000.

Component Useful Life Value Land Indefinite life €3,000,000 Building structure 60-year life 4,200,000 Building engineering 30-year life 2,100,000 Building external works 30-year life 700,000 Instructions

a. Compute depreciation expense for 2025, assuming that Veenman uses component depreciation (zero residual value).

b. Assume that the building engineering was replaced in 20 years at a cost of €2,300,000. Prepare the entry to record the replacement of the old component with the new component.