Under the Uniform Appraisal Standards for Federal Land Acquisitions, which depreciation methods must support the dollar amount of each form of depreciation, rather than published tables or age-life computations?
Correct Answer
D) The breakdown method and the market extraction method
Under the Uniform Appraisal Standards for Federal Land Acquisitions, the dollar amounts for each form of depreciation must be supported by market data using the breakdown method or the market extraction method, not published tables or age-life computations.
Why This Is the Correct Answer
Option D is correct because the Uniform Appraisal Standards for Federal Land Acquisitions state that the dollar amounts for each form of depreciation must be supported by market data using the breakdown method or the market extraction method. They state that depreciation should not be estimated with published tables or age-life computations.
Why the Other Options Are Wrong
Option A: The age-life method and published depreciation tables
Option A names the age-life method and published depreciation tables, which are exactly the techniques these federal standards say should not be used to estimate depreciation.
Option B: The cost-to-cure method only
Option B, the cost-to-cure method only, does not match the standards, which name the breakdown method or the market extraction method as the required market-supported methods.
Option C: The straight-line method and the book depreciation method
Option C names the straight-line method and book depreciation. Straight-line is an age-life computation, and book depreciation is an accounting allocation, neither of which the standards accept for this purpose.
Federal depreciation: break or extract
For federal land acquisition appraisals, depreciation must come from the market by breakdown or extraction, not from tables.
How to use: Use this to recall the two accepted methods under the federal standards.
Exam Tip
When a question names these federal standards, pick the market-based methods and reject tables, age-life or book approaches.
Common Mistakes to Avoid
- -Relying on published depreciation tables in a federal acquisition appraisal
- -Treating age-life computations as market support
- -Confusing accounting book depreciation with appraisal depreciation
Concept Deep Dive
Analysis
This question tests a specific requirement of the Uniform Appraisal Standards for Federal Land Acquisitions. Those standards require depreciation dollar amounts to be supported by market data through the breakdown method or the market extraction method, and they reject published tables and age-life computations.
Background Knowledge
The breakdown method measures physical, functional and external depreciation separately, while market extraction derives total depreciation from comparable sales. Federal acquisition standards emphasize market support for depreciation rather than formula-driven tables.
Real-World Application
An appraiser preparing a federal acquisition appraisal of an improved parcel cannot rely on a cost service depreciation table. The appraiser extracts depreciation from comparable sales and documents the market support.
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