A company buys an oil rig for $5,000,000 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 $1,000,000 (present value at 10% is $385,550). 10% is an appropriate interest rate for this company.

A. Record the purchase of the asset including all aspects of the project.

b. Record year-end entries related to the project as of 12/31/21 and also for 12/31/22.

c. Assume that at the end of the life of the rig, the actual clean-up cost is $950,000 which is paid in cash. Record the entry to record the clean-up..