2. An analyst is evaluating the financial statements of two companies in the same industry. The companies have similar strategies with respect to the use of equipment in the manufacturing of their products. The following information is provided (amounts in million): # Equipment Depreciation expense ABC 6000 600 XYZ 3750 250 Required: (a) Estimate the average remaining useful lives of the asset bases of ABC and XYZ. (5 Marks) (b) Suppose that, based on a physical inspection of the companies' plans and other industry information, the analyst believes that the actual remaining lives of ABC and XYZ assets are roughly equal at 10 years. Based only on the facts given, explain what the analyst might conclude about XYZ's reported net income. (10 Marks) 2. An analyst is evaluating the financial statements of two companies in the same industry. The companies have similar strategies with respect to the use of equipment in the manufacturing of their products. The following information is provided (amounts in million): # Equipment Depreciation expense ABC 6000 600 XYZ 3750 250 Required: (a) Estimate the average remaining useful lives of the asset bases of ABC and XYZ. (5 Marks) (b) Suppose that, based on a physical inspection of the companies' plans and other industry information, the analyst believes that the actual remaining lives of ABC and XYZ assets are roughly equal at 10 years. Based only on the facts given, explain what the analyst might conclude about XYZ's reported net income. (10 Marks)