Reproduction cost new of the improvements is $285,000, total accrued depreciation is $57,000, and the site is valued at $95,000. What value does the cost approach indicate?
Correct Answer
D) $323,000
Why this is correct: depreciation comes off the improvements, and the site is added afterward because land does not depreciate. Calculation: $285,000 - $57,000 + $95,000 = $323,000. Why the other choices are wrong: $228,000 stops at the depreciated improvements and omits the site entirely; $437,000 adds the depreciation instead of deducting it; $133,000 deducts the site value as though it were a further charge against the improvements.
Why This Is the Correct Answer
Why this is correct: depreciation comes off the improvements, and the site is added afterward because land does not depreciate. Calculation: $285,000 - $57,000 + $95,000 = $323,000. Why the other choices are wrong: $228,000 stops at the depreciated improvements and omits the site entirely; $437,000 adds the depreciation instead of deducting it; $133,000 deducts the site value as though it were a further charge against the improvements.
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A 30-year-old house has been renovated so thoroughly that it competes with 12-year-old homes. Which number drives its age-life depreciation?
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An appraiser observes that a 30-year-old apartment building has severe deferred maintenance, including widespread roof membrane failure, corroded plumbing risers, and obsolete electrical panels. However, its location is exceptionally strong, and its unit mix matches current demand. The appraiser estimates total economic life at 55 years but assigns an effective age of 44 years. Later, she discovers that nearly identical buildings in the same submarket have been acquired by investors who rehabilitated them and achieved stabilized cap rates within 12 months—suggesting strong remaining utility. What is the appraiser’s obligation under USPAP regarding her effective age conclusion?