Pablo is the manager of a small manufacturing firm that has decided to replace its current heating system. Pablo knows the cost of purchasing and installing the new system, as well as the original cost and the current scrap value of the old system. If Pablo wants to capitalize the cost of the replacement using the substitution approach, which of the following statements is accurate?

Pablo cannot use the substitution approach because the replacement does not extend the heating system's useful life. Pablo must determine accumulated depreciation on the old system before proceeding with the substitution approach. Pablo currently has all the information he needs to proceed with the substitution approach.

Pablo is ready to proceed with the substitution approach, but only if he is confident that the old system has depreciated such that its carrying cost is almost zero.