Accrued depreciation in the cost approach includes which of the following?

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Multiple Choice

Accrued depreciation in the cost approach includes which of the following?

Explanation:
Accrued depreciation in the cost approach reflects the loss in value from the property’s physical wear and aging. Physical deterioration encompasses the actual condition of the building—wear, need for repairs, and aging materials—that reduces value over time. Functional obsolescence and external (economic) obsolescence are caused by design shortcomings or factors outside the property, respectively; they are depreciation types but not what is meant by accrued depreciation. So the depreciation tied to the property’s own condition is physical deterioration.

Accrued depreciation in the cost approach reflects the loss in value from the property’s physical wear and aging. Physical deterioration encompasses the actual condition of the building—wear, need for repairs, and aging materials—that reduces value over time. Functional obsolescence and external (economic) obsolescence are caused by design shortcomings or factors outside the property, respectively; they are depreciation types but not what is meant by accrued depreciation. So the depreciation tied to the property’s own condition is physical deterioration.

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