REE 4103 CH 29: Calculate
A 30-year-old buidling with an effective age of 20 years has a total life expectancy of 50
years. How much depreciation has occurred?
A. 10%
B. 20%
C. 40%
D. 60% - ANS-40%
A property sold for $125,000 in a cash sale. It was 12 years old and had a site value of
$30,000. The reproduction cost of the building improvements was $102,350. What is the
amount of depreciation overall?
A. 6.50%
B. 7.18%
C. 7.56%
D. 8.85% - ANS-7.18%
Effective age refers to:
A. chronological age
B. average age
C. apparent age, considering the physical condition and marketability of a structure
D. the age depreciation method - ANS-apparent age, considering the physical condition
and marketability of a structure
Functional obsolescence is
A. The difference between what you have and what you should have
B. The loss in value due to an oversupply in the market
C. The loss in value due to a property's proximity to an adverse condition
D. The loss in value from the passage of time - ANS-The difference between what you
have and what you should have
The three principal methods of estimating depreciation are
A. Age-life, breakdown, and direct capitalization
B. Age-life, economic extraction, and direct cost allocation
,C. Market extraction, economic age-life, and physical breakdown
D. Market extraction, age-life, and breakdown - ANS-Market extraction, age-life, and
breakdown
This Narrative Applies to the Next Three (3) Questions
An appraiser noted the following about a rental home: Needs exterior paint $750 cost to
cure; Needs new water heater $250 cost to cure; Has one bath in market for two
($4,000 capitalized rent loss); Has poor floor plan ($2,500 capitalized rent loss); Is
located next to a convenience store ($1,200 capitalized rent loss).
How much is curable physical deterioration?
A. $250
B. $750
C. $4,000
D. None of the above - ANS-None of the above
Based on the data in the following example, what is the approximate average annual
rate of depreciation?
Apartment house sale price $450,000
Estimated site value $ 50,000
Estimated Reproduction cost $500,000
Effective age 20 years
A. 1.5% per year
B. 2.0% per year
C. 1.0% per year
D. 10% per year - ANS-1.0% per year
Depreciation
The reproduction cost of a commercial building is estimated to be $800,000. The
building should have an economic life of 50 years, and it is now five years old, which is
also its effective age.
Using the age-life method, what is the total percentage depreciation of the building?
A. 10%
B. 5%
C. .05%
D. 50% - ANS-10%
, Depreciation
The reproduction cost of a commercial building is estimated to be $800,000. The
building should have an economic life of 50 years, and it is now five years old, which is
also its effective age.
Using the age-life method, what is the total dollar amount of depreciation?
A. 10%
B. $80,000
C. $720,000
D. $10,000 - ANS-$80,000
Depreciation
The reproduction cost of a commercial building is estimated to be $800,000. The
building should have an economic life of 50 years, and it is now five years old, which is
also its effective age.
Using the age-life method, what is the depreciated value of the building?
A. $800,000
B. $80,000
C. $720,000
D. $10,000 - ANS-$720,000
Depreciation
Bldg with a total cost of $700,000. It is 35 years old. Total useful life expectancy of 100
years. The cost of deferred maintenance is $10,000. Short-lived components include
the boiler, roof cover, and floor covering. The cost to replace the boiler is $40,000, the
cost to replace the roof covering is $60,000, and the cost to replace the floor finish is
$20,000. There are no other short-lived items.
What is the dollar amount of depreciation associated with deferred maintenance?
A. $10,000
B. $60,000
C. $40,000
D. None of the above. - ANS-$10,000
Depreciation
A 30-year-old buidling with an effective age of 20 years has a total life expectancy of 50
years. How much depreciation has occurred?
A. 10%
B. 20%
C. 40%
D. 60% - ANS-40%
A property sold for $125,000 in a cash sale. It was 12 years old and had a site value of
$30,000. The reproduction cost of the building improvements was $102,350. What is the
amount of depreciation overall?
A. 6.50%
B. 7.18%
C. 7.56%
D. 8.85% - ANS-7.18%
Effective age refers to:
A. chronological age
B. average age
C. apparent age, considering the physical condition and marketability of a structure
D. the age depreciation method - ANS-apparent age, considering the physical condition
and marketability of a structure
Functional obsolescence is
A. The difference between what you have and what you should have
B. The loss in value due to an oversupply in the market
C. The loss in value due to a property's proximity to an adverse condition
D. The loss in value from the passage of time - ANS-The difference between what you
have and what you should have
The three principal methods of estimating depreciation are
A. Age-life, breakdown, and direct capitalization
B. Age-life, economic extraction, and direct cost allocation
,C. Market extraction, economic age-life, and physical breakdown
D. Market extraction, age-life, and breakdown - ANS-Market extraction, age-life, and
breakdown
This Narrative Applies to the Next Three (3) Questions
An appraiser noted the following about a rental home: Needs exterior paint $750 cost to
cure; Needs new water heater $250 cost to cure; Has one bath in market for two
($4,000 capitalized rent loss); Has poor floor plan ($2,500 capitalized rent loss); Is
located next to a convenience store ($1,200 capitalized rent loss).
How much is curable physical deterioration?
A. $250
B. $750
C. $4,000
D. None of the above - ANS-None of the above
Based on the data in the following example, what is the approximate average annual
rate of depreciation?
Apartment house sale price $450,000
Estimated site value $ 50,000
Estimated Reproduction cost $500,000
Effective age 20 years
A. 1.5% per year
B. 2.0% per year
C. 1.0% per year
D. 10% per year - ANS-1.0% per year
Depreciation
The reproduction cost of a commercial building is estimated to be $800,000. The
building should have an economic life of 50 years, and it is now five years old, which is
also its effective age.
Using the age-life method, what is the total percentage depreciation of the building?
A. 10%
B. 5%
C. .05%
D. 50% - ANS-10%
, Depreciation
The reproduction cost of a commercial building is estimated to be $800,000. The
building should have an economic life of 50 years, and it is now five years old, which is
also its effective age.
Using the age-life method, what is the total dollar amount of depreciation?
A. 10%
B. $80,000
C. $720,000
D. $10,000 - ANS-$80,000
Depreciation
The reproduction cost of a commercial building is estimated to be $800,000. The
building should have an economic life of 50 years, and it is now five years old, which is
also its effective age.
Using the age-life method, what is the depreciated value of the building?
A. $800,000
B. $80,000
C. $720,000
D. $10,000 - ANS-$720,000
Depreciation
Bldg with a total cost of $700,000. It is 35 years old. Total useful life expectancy of 100
years. The cost of deferred maintenance is $10,000. Short-lived components include
the boiler, roof cover, and floor covering. The cost to replace the boiler is $40,000, the
cost to replace the roof covering is $60,000, and the cost to replace the floor finish is
$20,000. There are no other short-lived items.
What is the dollar amount of depreciation associated with deferred maintenance?
A. $10,000
B. $60,000
C. $40,000
D. None of the above. - ANS-$10,000
Depreciation
