Detailed Answer
Correct answer: (B)
Report the book value of the equipment in its December 31,2018 balance sheet at $210,000.
Explanation: The computation is as follows: Book value at 1/1/2018 = $400,000 (3 × $40,000) = $280,000
Prospective change in depreciation estimate for four remaining years is:
$280,000/4 = $70,000 per year.
$280,000-$70,000
=$210,000