Final answer:
Depreciation is divided into three types: physical deterioration, functional obsolescence, and economic obsolescence.
Step-by-step explanation:
Depreciation is divided into three types: physical deterioration, functional obsolescence, and economic obsolescence. Economic obsolescence refers to a decrease in value caused by external factors that make an asset less desirable or useful. It can result from changes in technology, market conditions, or government regulations. For example, if a new law is passed that restricts the use of a certain type of equipment, the equipment may become obsolete and lose value.