Question

Suppose that an appraiser has come to the following conclusions in evaluating the subject property. Due to the dramatic shift in the perceived safety of the neighborhood, values of any residential properties in the area of the subject property have fallen by $10,000, on average. Due to the subject property's age, physical deterioration to the building accounts for an estimate of S50,000 in lost value. An evaluation of the floor plan reveals that it is quite obsolete relative to current homebuyer preferences. This has a detrimental effect on the value of the property that is estimated to be approximately $15,000. Based on your understanding of adjustments related to accrued depreciation, which of the following pertains to the adjustment for external obsolescence?
A. $10,000
B. $15,000
C. $50,000
D. $75,000

Answer 1

Answer:

A

Explanation:

Obsolescence is the loss in value of a property.

there are different types of obsolescence

They include :

1. External obsolescence is the loss in value of a property as a result of factors external to the property. Such factors include economic, social or environmental.

Loss in value due to safety concerns qualifies as external obsolescence

2. Physical obsolescence

3. Functional obsolescence