Question

What kind of depreciation is considered when there is a leaky roof?

1) Physical depreciation
2) Functional depreciation
3) Economic depreciation
4) External depreciation

Answer 1

Physical depreciation is considered when there is a leaky roof, as it entails the loss in value due to wear and tear or damage.

Step-by-step explanation:

The kind of depreciation considered when there is a leaky roof is 1) Physical depreciation. Physical depreciation refers to the loss in value of a property due to wear and tear or damage. In the case of a leaky roof, it is physical damage that is causing the asset to depreciate. This is different from functional depreciation, which occurs when an asset becomes obsolete or less useful due to changes in technology or market preferences; economic depreciation, which relates to external factors that cause a property to lose value such as changes in the economy or regulatory environment; and external depreciation, which deals with loss in value due to factors outside the property, like neighborhood decline.