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Question:
ABC Corp. purchases a milling machine. The company considers the machine’s rotating cutter to be a significant component. Which of the following is least likely an additional estimate that the company will be required to make if it depreciates the milling machine using the component method instead of depreciating it as a whole?
A
Useful life of milling machine
explanation
ABC would need to estimate the useful life of the milling machine regardless of whether it chooses to depreciate it using the component method or not. However, the company would be required to estimate the useful life and residual value of the cutter (component) only if it plans to use the component method.
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