Total improvement cost new is $500,000, including short-lived components $70,000 with separately supported loss $30,000. Apply 22% physical loss only to remaining long-lived cost. No other physical loss applies. What total physical depreciation results?
Correct Answer
C) $124,600
(500000−70000)×0.22+30000 = 124600. Common errors: applying the 22% to total cost instead of only the long-lived cost gives $140,000; leaving out the short-lived component loss gives $94,600; applying 22% to total cost and ignoring the short-lived loss gives $110,000.
Why This Is the Correct Answer
(500000−70000)×0.22+30000 = 124600. Common errors: applying the 22% to total cost instead of only the long-lived cost gives $140,000; leaving out the short-lived component loss gives $94,600; applying 22% to total cost and ignoring the short-lived loss gives $110,000.
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A cost total $650,000 explicitly includes $40,000 of non-realty FF&E outside the appraised real-property interest. Exclude it. Supported realty-only total depreciation is $55,000. Add site $200,000, with no overlap. What real-property cost indication results?
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