Majid Corporation of Dubai has acquired a machine with a useful life of 30 years and at a cost of $300,000. At the end of the 5^th year of operation the motor of the machine requires replacement. The machine is still in good condition and is expected to continue operating for another 25 years. The cost of the new motor is $70,000.

Required:

a) Record the journal entry for the purchase of the motor.

b) Estimate the value of the original motor assuming a 5% increase of the price of motors over the 5- year period.