What is an estimate based on?
It is based on approximate values for the variable or a model which is not accurate or both.
Most modern maps will provide an estimate of the time it will take you to travel your destination what is the estimate based on?
How can I tell if my estimated answer is greater or less than the exact answer to a multiplication problem?
You can take known information about the company and apply industry/regional standards. For example, if it is a retail store, you could estimate sales based on square footage and then estimate profit as a percentage of sales. If it is a service business, you could estimate income per productive employee, etc.
Initially, depreciation for financial reporting purposes is based on an owner's estimate of the useful life of the asset in service. If later, the owner has better or additional information about the true useful life of the asset, he can revise his estimate of its useful life and take all remaining depreciation (on a going-forward basis) based on the asset's revised remaining useful life.