Cost Approach and Depreciation Flashcards
7 cards from real SAEE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Cost Approach and Depreciation flashcards as text
Accrued depreciation in the cost approach is best defined as:
Answer: The total loss in value from all causes as of the appraisal date
Accrued depreciation is the difference between cost new and current value, reflecting all losses to date.
The three major categories of depreciation recognized in appraisal are:
Answer: Physical, functional, and external
Depreciation is categorized as physical deterioration, functional obsolescence, and external obsolescence.
A worn-out roof that can be economically repaired is an example of:
Answer: Curable physical deterioration
A roof that is cost-effective to replace represents curable physical deterioration.
Depreciation is considered 'incurable' when:
Answer: The cost to cure exceeds the value added
An item is incurable when the cost to correct it is greater than the value it would add.
A four-bedroom house with only one bathroom suffers primarily from:
Answer: Functional obsolescence
An inadequate or outdated layout such as too few bathrooms is functional obsolescence.
A home that declines in value because a landfill opened nearby suffers from:
Answer: External (economic) obsolescence
Loss caused by factors outside the property boundary is external obsolescence.
Which type of depreciation is almost always considered incurable?
Answer: External obsolescence
External obsolescence is generally incurable because the owner cannot fix off-site causes.