Total PHYSICAL depreciation is $62,000, consisting only of curable physical $9,000, short-lived incurable $14,000, and a remaining long-lived incurable component. Functional and external loss are excluded. What is the remaining component?
Correct Answer
B) $39,000
62000−9000−14000 = 39000. Common errors: leaving out the short-lived incurable item gives $53,000; leaving out the curable item gives $48,000; reporting the two known items instead of the remaining component gives $23,000.
Why This Is the Correct Answer
Option B is correct because $62,000 − $9,000 − $14,000 = $39,000. Total depreciation is the sum of the individual estimates, so the remaining long-lived incurable component is the total less the curable and short-lived incurable amounts.
Why the Other Options Are Wrong
Option A: $23,000
Option A is wrong because $23,000 is $9,000 + $14,000, the sum of the two known items rather than the remaining component. The remaining component is $62,000 − $23,000 = $39,000.
Option C: $48,000
Option C is wrong because $48,000 is $62,000 − $14,000, which leaves out the $9,000 curable item. Subtracting both known items gives $39,000.
Option D: $53,000
Option D is wrong because $53,000 is $62,000 − $9,000, which leaves out the $14,000 short-lived incurable item. Subtracting both known items gives $39,000.
Total minus known parts
When parts add to a known total, the missing part is the total minus each known part.
How to use: Use this to solve for any missing depreciation component when the total and other parts are given.
Exam Tip
Subtract each known component from the total; distractors often subtract only one or add the known parts instead.
Common Mistakes to Avoid
- -Subtracting only one of the known components
- -Reporting the sum of the known components as the answer
- -Mixing functional or external loss into a physical-only breakdown
Concept Deep Dive
Analysis
This question tests the breakdown of physical depreciation into curable, short-lived incurable and long-lived incurable components. Because total physical depreciation equals the sum of its parts, the unknown long-lived component is found by subtracting the two known parts from the total. Functional and external loss are excluded and play no role.
Background Knowledge
In the breakdown method, physical deterioration is often divided into curable items, short-lived incurable items that will need replacement before the end of the building's life, and long-lived incurable items for the remaining structure. The parts together equal total physical deterioration. Knowing any two parts and the total lets you solve for the third.
Real-World Application
An appraiser has estimated total physical deterioration for an older home and separately priced deferred maintenance and a roof nearing replacement. The appraiser subtracts both from the total to isolate the long-lived incurable deterioration of the structure.
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