Part 3 - Depreciation Concepts

Question 1

T/F - Effective age and remaining economic life are opinions

Answer 1

True

3-49

Question 2

____________ is a loss in property value from any cause

Answer 2

Depreciation

3-50

Question 3

__________ life is the period over which improvements to real estate contribute to property value

Answer 3

Economic

3-50

Question 4

Remaining _________ life is the estimated period over which existing improvements are expected to contribute economically to a property

Answer 4

Economic

3-50

Question 5

_________ life is the period of time over which a structure or component of a property may reasonably be expected to perform the function for which it was designed

Answer 5

Useful

3-50

Question 6

_______ age is the number of years that have elapsed since construction of an improvement was completed
A fact

Answer 6

Actual

3-51

Question 7

__________ age is the age of a property that is based on the amount of observed deterioration and obsolescence it has sustained, which may be different from its chronological or actual age

Answer 7

Effective

3-51

Question 8

Deterioration in a building component is considered _______ if the cost of correcting the condition is offset by an equal or greater increase in value

Answer 8

Curable

3-52

Question 9

_________ physical deterioration is a form of physical deterioration that can be practically and economically corrected as of the date of the appraisal

Answer 9

Curable

3-52

Question 10

______________ physical deterioration is a form of physical deterioration that can’t be practically or economically corrected as of the effective date of appraisal

Answer 10

Incurable

3-53

Question 11

______-lived item is an item with an expected remaining economic life that is shorter than the remaining economic life of the entire structure

Answer 11

Short

3-53

Question 12

______-lived building components/items are expected to have the same useful life as the entire structure

Answer 12

Long

3-54

Question 13

__________ obsolescence is an element of depreciation resulting from deficiencies or superadequacies in the structure

Answer 13

Functional

3-54

Question 14

Curable __________ obsolescence is a curable defect caused by a flaw in the structure, materials or design, which can be practically and economically corrected

Answer 14

Functional

3-55

Question 15

An__________ functional obsolescence is a defect caused by a deficiency or superadequacy in the structure, materials or design that cannot be practically or economically corrected as of the effective date of the appraisal

Answer 15

Incurable

3-57

Question 16

External ___________ is a diminution in value caused by negative external influences and generally incurable on the part of the owner

Answer 16

Obsolescence

3-59

Question 17

The two types of external obsolescence are:
1 - ___________
2 - ___________

Answer 17

1 - Economic
2 - Locational

3-59

Question 18

Effective Age + __________ Effective Life = Effective Life

Answer 18

Remaining

3-61

Question 19

T/F - If after curing a functional obsolescence on a building, and the value added is $0 or more, the obsolescence would be considered curable

Answer 19

True