Cost Approach Quiz #4

1.What is depreciation?

Decrease in utility

Increase in Utility

A gain in property value 

Something I dont need to know anything about

Decrease in utility

When talking about depreciation in accounting, it is ...

The difference between current cost new and the current market value.

A $ or % deducted from the estimated current cost of the improvements.

Allowable deduction starting with the historic book value. 

The best estimate of the actual market loss in value as compared to a new building.  

Allowable deduction starting with the historic book value. 

In using the Cost Approach, you must do all of the following except:

Estimate the current reproduction or replacement costs of the existing improvements.

Determine comparable properties based on sales price.

Deduct the total accrued depreciation from the cist of the new improvements.

Add the depreciated improvement value to the estimated land value to arrive at an estimated total value.  

Determine comparable properties based on sales price.

.The three types of depreciation include all except which one? 

Physical Deterioration

Economic Obsolescence

External Obsolescence

Functional Obsolescence

None of the Above

None of the Above - ?

5.Economic obsolescence is almost always incurable.

True

False

True

Replacing broken glass is an example of what?

Curable Physical Depreciation

Curable Functional Obsolescence

Incurable Physical Depreciation

Curable Economic Obsolescence

Curable Physical Depreciation

7.A poor floor plan is an example of what?

Curable Functional Obsolescence

Incurable Functional Obsolescence

Incurable Economic Obsolescence

Curable Physical Depreciation

Incurable Functional Obsolescence

A major employer moving away from the area is an example of what?

Curable Economic Obsolescence

Incurable Functional Obsolescence

Incurable Physical Depreciation

Incurable Economic Obsolescence

Incurable Economic Obsolescence

The 4 Methods of measuring Accrued Depreciation include all except which?

Straight Line/ Age Life

Sales Data/ Market

Cost to Build

Capitalized Income/ Rental Loss

Cost to Cure

Cost to Build

10.Based off of market information, you have a GRM of 145.  Similar properties in the area rent for $2,250 a month.  Your property is being rented for $1,900 a month.  What is the Total accrued depreciation on the property? (Rounded to the Nearest 1,000)

$50,000

$51,000

$36,000

$55,000

$51,000