Valuation & AppraisalQuestion 99 of 120
Accrued depreciation in the cost approach represents:
a.The total loss in value from all causes since construction
b.The increase in land value over time
c.The lender's required insurance
d.The buyer's down payment
Explanation
Accrued depreciation is the total loss in value of the improvements from physical deterioration, functional obsolescence, and external obsolescence since they were built. In the cost approach, it is subtracted from the reproduction or replacement cost. Land is valued separately and is not depreciated.
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