Final answer:
When calculating depreciation, both plant asset cost and useful life are based on estimates.
Step-by-step explanation:
When calculating depreciation, both plant asset cost and useful life are indeed based on estimates. This means that the figures used to determine the depreciation expense are not exact, but rather approximations. The plant asset cost is the original cost of acquiring or constructing the asset, and it is typically estimated based on the purchase price or the costs involved in building the asset. The useful life is an estimate of how long the asset is expected to be used in the business before it becomes obsolete or is no longer productive. This estimation is based on factors such as historical usage data, industry standards, and technical obsolescence.