Property Valuation
Accrued depreciation in the cost approach is the sum of:
AOnly physical deterioration
BPhysical deterioration, functional obsolescence, and external obsolescence✓ Correct
COnly functional and external obsolescence
DBook depreciation from tax records
Explanation
Total accrued depreciation = Physical deterioration (wear and tear) + Functional obsolescence (outdated design) + External (economic) obsolescence (outside factors). All three forms must be considered and subtracted from the reproduction/replacement cost in the cost approach.
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