Property Valuation
Accrued depreciation in the cost approach equals:
AThe total cost to build the improvement new
BThe total loss in value from all causes (physical, functional, external)✓ Correct
CThe annual depreciation deduction for income tax purposes
DThe difference between the land value and the total property value
Explanation
In the cost approach, accrued depreciation is the total loss in value from all causes: physical deterioration, functional obsolescence, and external obsolescence. It is subtracted from the replacement/reproduction cost new.
Related Arkansas Property Valuation Questions
- The principle of contribution states that the value of an improvement is measured by:
- A property's Gross Rent Multiplier (GRM) is calculated by dividing the:
- The sales comparison approach estimates value by:
- A comparable home sold for $200,000. It has a garage worth $10,000 that the subject property lacks. The adjusted sale price of the comparable is:
- Depreciation in the cost approach refers to:
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- Functional obsolescence in a residential property is best illustrated by:
- Economic life of an improvement differs from physical life in that it is:
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