Question

Evans owns a new personal residence. The transportation agency is widening the street in front of his residence. This will cause Evans to lose 10 ft long front of his property which borders the street. This is an example of

(A) functional obsolescence
(B) economic obsolescence
(C) physical deterioration
(D) accrued depreciation

Answer 1

Evans' loss of property due to street widening is an example of economic obsolescence, which involves external factors diminishing the property value.

Step-by-step explanation:

When the transportation agency is widening the street and causing Evans to lose 10 ft of the front of his property, this action is considered an example of economic obsolescence.

Unlike functional obsolescence, which is related to the design or function of the property becoming outdated, economic obsolescence pertains to external factors not within the property itself that negatively impact its value.

Economic obsolescence can be caused by factors such as changes in zoning, traffic patterns, or, in this case, actions by the government that cause a loss of property. It is not a result of physical deterioration, which refers to the wear and tear on the property itself, nor is it accrued depreciation, which is the reduction in the value of an asset over time due to various factors including physical deterioration and obsolescence.