Financial statements are prepared from a(n) a

Financial statements are prepared from a(n)

a. trial balance

b. general ledger

c. chart of accounts

d. journal entries

A company buys an oil rig for $1,500,000 on January 1, 2014. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $400,000 (present value at 10% is $154,220). 10% is an appropriate interest rate for this company. What expense should be recorded for 2014 as a result of these events?

a.   Depreciation expense of $190,000

b.   Depreciation expense of $165,422 and interest expense of $15,422

c.   Depreciation expense of $150,000 and interest expense of $40,000

d.   Depreciation expense of $215,422 and interest expense of $15,422