Allison Frakes is the senior on the audit of Gazelle Airways, a small public company. Along with the audit manager, Allison has determined that a critical audit matter (CAM) involves determining the useful lives and residual audit values of Gazelles aircraft. This will be discussed with the audit committee and disclosed in the auditors report. Scott McKenzie, a second-year staff member, has been working on fixed assets and Allison asks Scott to come back with a first draft of the CAM for the auditors report. Scott prepares the following: Gazelle Airways has aircraft and related assets totaling $2,432 million and $1,932 million at December 31, 2020 and 2021, respectively. The useful lives and residual values of aircraft may be influenced by new technology, economic conditions, and demand. Gazelle considers these changes when reassessing the useful lives and residual values of aircraft to determine the appropriate depreciation rates. This is a critical audit matter due to the level of judgment required by Gazelle in determining the useful lives and residual values of the aircraft fleet, which affects both carrying values of aircraft and depreciation charges.