In year 1, Chain, Inc. purchased a $1,000,000 life insurance policy on its president, of which Chain is the beneficiary. Information regarding the policy for the year ended December 31, year 4, follows:
Cash surrender value, 1/1/Y4 $87,000
Cash surrender value, 12/31/Y4 $108,000
Annual advance premium paid 1/1/Y4 $40,000
During year 4, dividends of $6,000 were applied to increase the cash surrender value of the policy. What amount should Chain report as life insurance expense for year 4?
A) $40,000
B) $25,000
C) $19,000
D) $13,000