In the breakdown method, the sequence of deductions is:

Correct Answer

D) Curable physical, then short-lived incurable, then long-lived incurable

Why this is correct: The breakdown method uses a specific sequence to avoid double-counting depreciation. First, deduct the cost to cure any curable physical items. Next, deduct depreciation for short-lived incurable components (like a roof) based on their individual remaining life. Finally, apply the depreciation rate for the long-lived incurable structure (the main building shell) to the remaining cost. Why the other choices are wrong: "Long-lived first, then short-lived, then curable items" is wrong; this incorrect order would miscalculate the base for the long-lived depreciation. "Any order, since all deductions total the same figure" is wrong; order matters because later deductions are applied to a reduced base. "External deductions first, since they affect the entire property value" is wrong; external obsolescence is applied last in the breakdown method. Exam tip: Sequence is key: Curable, Short-lived, Long-lived. Think "Cure, Specific, General."