Mobic Inc Acquired Some Manufacturing Equipment in January 2006 for $400,000

Mobic Inc. acquired some manufacturing equipment in January 2006 for $400,000 and depreciated it $40,000 each year for three years on a straight-line basis. During 2009, the manufacturer announced a new technology for this type of equipment that will make the old models obsolete by the end of 2012. As a result, Mobic will plan to replace the equipment at that time, effectively reducing the asset's life from ten to seven years. In its financial statements for 2009, Mobic should:

A) Charge $280,000 in depreciation expense.
B) Report the book value of the equipment on its12/31/09 balance sheet at $210,000.
C) Make an adjustment to retained earnings for the error in measuring depreciation during 2006-2008.
D) None of these is correct.The computation is as follows: Book value at 1/1/09 = $400,000 (3 $40,000) = $280,000
Prospective change in depreciation estimate for four remaining years is $280,000/4 = $70,000 per year.