Question

Defined as a loss in value from any cause, depreciation is generally divided into three categories. The loss of value due to the normal wear and tear on a property is called

a. physical deterioration.
b. functional obsolescence.
c. external depreciation.
d. economic deterioration.

Answer 1

a. physical deterioration.

Step-by-step explanation:

Depreciation is the decrease or loss of value of an asset. Money, plants and machinery are subject to a decline in value due to various reason. Appreciation is gain in value and therefore, an opposite of depreciation.

Physical depreciation is the loss of value due to aging, or wear and tear. It arises from the usage of the asset or collusion. Physical depreciation is naturally occurring. It begins as soon the asset is purchased and placed under its intended use.

The cost of depreciation is the difference between an assets cost price and the estimated value after wear and tear.