Which type of depreciation is generally considered incurable?

Which type of depreciation is generally considered incurable?

• A. Physical deterioration
• B. Economic or external obsolescence
• C. Functional obsolescence
• D. Physical depreciation

Answer: (B)

Economic or external obsolescence is indeed considered incurable because it refers to a decline in property value due to external factors beyond the property owner's control, such as changes in market conditions, neighborhood deterioration, or increased crime rates. Unlike physical deterioration or functional obsolescence, which can often be remedied through repairs or renovations, external obsolescence arises from factors that cannot be corrected through physical improvements. For instance, if a new highway is built that reroutes traffic away from a commercial property, the resulting decreased visibility and accessibility could diminish the property’s market value, and no amount of investment in the property itself would change this situation. As a result, this type of depreciation is recognized as incurable because it stems from conditions outside the property and is not amenable to restoration or repair efforts.

Economic or external obsolescence is indeed considered incurable because it refers to a decline in property value due to external factors beyond the property owner's control, such as changes in market conditions, neighborhood deterioration, or increased crime rates. Unlike physical deterioration or functional obsolescence, which can often be remedied through repairs or renovations, external obsolescence arises from factors that cannot be corrected through physical improvements.

For instance, if a new highway is built that reroutes traffic away from a commercial property, the resulting decreased visibility and accessibility could diminish the property’s market value, and no amount of investment in the property itself would change this situation. As a result, this type of depreciation is recognized as incurable because it stems from conditions outside the property and is not amenable to restoration or repair efforts.