Question

The principle underlying depreciation from physical deterioration is that

1. value lost to depreciation is incurable.
2. a property loses the same increment of value each year over the economic life of the property.
3. a property loses a portion of its value each year because of economic obsolescence.
4. eventually, a property loses all of its value.

Answer 1

Depreciation from physical deterioration means that a property loses the same increment of value each year over its economic life.

Step-by-step explanation:

The principle underlying depreciation from physical deterioration is that a property loses the same increment of value each year over the economic life of the property. This means that the value lost to depreciation is predictable and gradual over time. For example, if a building has an economic life of 50 years, it may lose 2% of its value each year due to physical deterioration.

However, it is important to note that not all depreciation is incurable. While physical deterioration is a factor in depreciation, properties can also lose value due to economic obsolescence or changes in market conditions. Economic obsolescence refers to external factors such as changes in technology, shifts in consumer demand, or changes in laws and regulations, which can impact the value of a property. It is possible for properties to undergo renovations or upgrades to mitigate the effects of depreciation and maintain or increase their value.