Question

Accrued depreciation is the difference between the current market value of a building and the total cost to reproduce it new. One reason for this difference is related to changes in tastes, preferences, technical innovations, or market standards. This is commonly referred to as:

Answer 1

Answer:

Functional Obsolescence.

Explanation:

One reason for the difference between the current market value of a building and the total cost to reproduce it is related to changes in tastes, preferences, technical innovations, or market standards, which is commonly referred to as functional obsolescence.

Functional obsolescence can be defined as depreciation in value due to reduction in desirability or functionality as a result of an obsolete design.

This will readily apply to buildings that have to be broken down most times in order to build a new one because their designs are outdated.

Answer 2

Answer:

Functional Obsolescence

Explanation:

In real estate, functional obsolescence refers to a property's loss of value due to changing tastes and preferences, or the property itself not being able to perform the functions it was originally intended to do.

For example, very old houses generally were built with only one bathroom, but families nowadays prefer houses with several bathrooms. Some architectural styles like Art Deco remain popular even today, but most older styles are regarded as obsolete.

Lost value due to functional obsolescence is something very difficult to solve since changing a house's layout is not easy or practical, or changing the facade of a building is extremely expensive and it might not be worth it.