A company buys an oil rig for $3,000,000 on January 1, 2021. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $600,000( present value at 10% is $231,330). 10% is an appropriate market interest rate for this company.

a) The journal entry required to record the asset retirement obligation should include a debit to oil rig (fixed asset) for {a} and a credit to Asset Retirement Obligation for {b}. b) Using the straight-line method with no salvage value, the expense recorded for 2021 as a result of these events should include depreciation expense of {c} and interest expense of {d}