The difference between the current replacement cost new and the estimated value of the building as of the date of the appraisal:

Question

Quizplus · Accepted Answer

The estimated value of a building as of the date of the appraisal minus the replacement cost new represents the past or accrued depreciation of the building. This is because the difference reflects the wear and tear or physical deterioration that has occurred since the building was constructed, which reduces its value compared to a new building. Market depreciation (A) refers to the loss in value due to external factors such as changes in supply and demand, while remainder depreciation (B) pertains to the portion of the value that cannot be attributed to land or improvements. Future or accrual for depreciation (D) is an estimate of the expected reduction in value over time due to physical wear and tear, functional obsolescence, or economic obsolescence.

The Difference Between the Current Replacement Cost New and the Estimated