Question on PPE

Dear Chris,

I have a question on PPE from the Kaplan Kit.

Question:

Tibet acquired a new office building on 1 October 20X4. Its initial carrying amount
consisted of:

$000
Land 2,000
Building structure 10,000
Air conditioning system 4,000
–––––––
16,000
–––––––

The estimated lives of the building structure and air conditioning system are 25 years and
10 years respectively.
When the air conditioning system is due for replacement, it is estimated that the old
system will be dismantled and sold for $500,000.
Depreciation is time?apportioned where appropriate.

At what amount will the office building be shown in Tibet’s statement of financial
position as at 31 March 20X5?

Answer:
$000
Land (not depreciated) 2,000
Building structure (10,000 – (10,000/25 × 6/12)) 9,800
Air conditioning system (4,000 – (3,500/10 × 6/12)) 3,825
––––––
15,625
––––––

What I do not comprehend is the steps regarding the carrying value of the air con. I understand that the $3500 comes from $4,000 – $500, but I don’t understand why is it being used to calculate the depreciation. Isn’t $3,500 supposed to be the loss of the dismantling of aircon?

Thanks for your help.