Final answer:
The main difference between replacement cost and reproduction cost lies in the approach used to determine the value of an asset or property.
Step-by-step explanation:
The main difference between replacement cost and reproduction cost lies in the approach used to determine the value of an asset or property. Replacement cost is the amount of money required to replace an asset with a similar or identical asset.
On the other hand, reproduction cost refers to the cost of recreating an asset from scratch, including all the expenses involved in replicating the original design, materials, and construction methods.
For example, if a company's office building gets damaged, the replacement cost would involve finding a similar building and estimating the current market value, while the reproduction cost would consider factors like hiring architects and contractors to rebuild the exact same building as it was before.