Question

Which of the following statements is true regarding depreciation? 1. Homeowners may depreciate their personal residences. 2. Depreciation is a loss in value from any cause. 3. Accrued depreciation will occur in the future. 4. Appraisers depreciate land and structures.

Answer 1

The true statement regarding depreciation is 4. Appraisers depreciate land and structures.

Step-by-step explanation:

The true statement regarding depreciation is 4. Appraisers depreciate land and structures.

Depreciation is the decrease in the value of an asset over time due to wear and tear, obsolescence, or other factors. In the case of real estate, appraisers often assign separate values for land and structures when determining the market value. The value of land usually appreciates, while structures can depreciate over time.

For example, imagine a commercial property with a building and a parking lot. The appraiser might determine that the land is worth $1 million and the building is worth $500,000. Over time, the building may decrease in value due to aging and normal wear and tear, resulting in depreciation.