I think you are referring to solution 2 and the treatment of the new cutter under the non-component method. Again, they are doing a horrible job at explaining this, here it is even worse because there is no explanation at all, but instead they just expect you to figure it out by providing one example.
Notice that for regular depreciation methods (i.e., without splitting the cost of an asset into separate components), component replacement is treated as a repair/maintenance expense.. So when you purchase the new equipment you pretty much depreciate that as if it were a new and separate item, but you add the depreciation expense to the originial unit.