In the cost approach, site improvements such as driveways and landscaping are:
Correct Answer
D) Included as a separate component of cost new
Why this is correct: In the cost approach, site improvements (driveways, landscaping, etc.) are separate line items with their own costs and depreciation schedules, distinct from the dwelling and land. Why the other choices are wrong: "Depreciated at the same rate as the dwelling" is wrong because they have different economic lives. "Part of the land value estimate itself" is wrong because land value is estimated as if vacant. "Excluded because they are not structures" is wrong because they are improvements included in cost new. Exam tip: Site improvements are separate cost components, not part of land or dwelling.
Why This Is the Correct Answer
Why this is correct: In the cost approach, site improvements (driveways, landscaping, etc.) are separate line items with their own costs and depreciation schedules, distinct from the dwelling and land. Why the other choices are wrong: "Depreciated at the same rate as the dwelling" is wrong because they have different economic lives. "Part of the land value estimate itself" is wrong because land value is estimated as if vacant. "Excluded because they are not structures" is wrong because they are improvements included in cost new. Exam tip: Site improvements are separate cost components, not part of land or dwelling.
More Cost Approach Questions
In a cost approach for a proposed building, the appropriate cost basis is generally:
A warehouse cost $210,000 to build when the cost index stood at 105. The index is now 210. Its indicated current cost is:
The age-life method expresses depreciation as:
Market extraction of depreciation is limited by the fact that it:
Functional obsolescence caused by a deficiency is measured as curable when:
Curable physical deterioration is measured at cost to cure because:
A 2,050 sq ft dwelling is priced at $178 per square foot with a $34,000 detached garage and $21,500 of site improvements. Cost new is:
A house has three bedrooms sharing one bathroom, and adding a second bath is economically justified. This is:
Direct costs in a construction budget include:
An appraiser writes that a 40-year-old house has an effective age of 10 but describes original wiring, original kitchen and a 25-year-old roof. The report's problem is:
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