Answer:

a. 2,000,000

Step-by-step explanation

From the name of the concept itself, we always record the machinery at its historical cost. Hence, it is shown in the books as 2,000,000. However, it is technically not correct to say 2,000,000 book value because later on you will be taught that book value means net of accumulated depreciation. Thus, strictly speaking, the book value is 2,000,000 less whatever accumulated depreciation there is.

As you progress through your accounting journey, you will know that there are two methods to record PPE: (1) historical cost; and (2) revaluation method. Only by revaluation method will you record PPE at its fair value in its subsequent years.