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Accrued Depreciation (Dépréciation accumulée)

All A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Term Definition
Accrued Depreciation (Dépréciation accumulée)
The difference between an improvement’s cost new and its value as of any given date. Depreciation is defined as a loss in utility and hence values from any cause. There are three (3) types of depreciation: physical deterioration, functional obsolescence and economic obsolescence. Depreciation can be measured in many ways, such as: - Depreciation Tables: (variant from Sales comparison method) elaborated throughout commercial Cost Manuals (ex: Marshall & Swift). - Sales Comparison Method: based on sales comparable to the subject building. The appraiser determines for each sale the sale price allocation to the building which is then deducted from the estimated reproduction or replacement cost new of building. - Breakdown Method: where each cause of depreciation is analyzed and measured separately for each of the components of the construction based on the appraiser's observations, experience and judgment. The appraiser then totals the estimates to derive a lump-sum figure that is deducted from the estimated reproduction or replacement cost of building. - Economic Age-Life Method: where the ratio between the effective age and total economic life of a building is applied to the cost of improvements. - Allocation Method: which allows the appraiser to identify, to analyze and to measure each cause of depreciation separately. The sum of all types of depreciations (i.e.: physical deterioration, functional obsolescence and economic obsolescence) is then deducted from the estimated reproduction or replacement cost of building.
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