Answer: 
The preferable statement will be - D. 
D. They show a transitional form between fish and land-dwelling vertebrates. 
Explanation: 
From the given information we know that the fossil of that type of animal has scales, fins, gills, lungs, a full set of ribs, and limb bones. 
This indicates some things such as, 
-  There is a high chance that the animal was capable of living in both land surface and water. 
 
- Scales, fins, and gills indicate that they were like fish or water vertebrates. 
 
- But lungs, a full set of ribs, and limb indicates that they are showing a transitional form between water and land-vertebrates.