SRA Cost Approach & Depreciation Analysis

Question 1

What are the three types of accrued depreciation recognized in the cost approach to value?

Accepted Answer

Physical deterioration, functional obsolescence, external obsolescence

Answer

Structural decay, economic decline, market obsolescence

Answer

Deferred maintenance, design deficiency, neighborhood decline

Answer

Curable depreciation, incurable depreciation, hidden depreciation

Question 2

What is the key distinction between reproduction cost and replacement cost in the cost approach?

Accepted Answer

Reproduction cost is the cost to build an exact replica; replacement cost uses modern materials and methods for equivalent utility

Answer

Reproduction cost uses modern materials; replacement cost uses original materials

Answer

Reproduction cost applies to land; replacement cost applies to improvements only

Answer

There is no meaningful difference between the two concepts in residential appraisal

Question 3

Which depreciation estimation method calculates accrued depreciation as the ratio of effective age to total economic life?

Accepted Answer

Age-life method

Answer

Sales extraction method

Answer

Market extraction method

Answer

Observed condition method

Question 4

How is 'functional obsolescence' defined in residential appraisal practice?

Accepted Answer

A loss in value caused by deficiencies or superadequacies in the property's design or features relative to market standards

Answer

Physical wear and tear from normal use over time

Answer

A loss in value due to factors located external to the property

Answer

Depreciation resulting solely from deferred maintenance

Question 5

External obsolescence in the cost approach is best characterized as:

Accepted Answer

Generally incurable and caused by factors located outside the property boundaries

Answer

Always curable through property renovation

Answer

A result of poor original construction quality

Answer

Limited to properties located within designated flood zones

Question 6

Which cost estimating method multiplies a unit cost per square foot by the structure's gross living area to estimate building cost?

Accepted Answer

Comparative unit method

Answer

Segregated cost method

Answer

Quantity survey method

Answer

Unit-in-place method

Question 7

What does 'effective age' represent in residential appraisal?

Accepted Answer

The age indicated by the condition and utility of the structure, which may differ from its chronological age

Answer

The actual chronological age of the structure since construction

Answer

The remaining economic life of the structure

Answer

The date on which the structure was most recently renovated