Computer · Estimating, Costing and Valuation
What is the difference between depreciation and obsolescence in property valuation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Depreciation refers to a reduction in value caused by changes in fashion, while obsolescence refers to structural decay over time.
- 2Depreciation represents loss due to market price fluctuation, while obsolescence represents direct physical damage from disasters.
- 3Depreciation refers to a reduction in value caused by physical wear and tear, while obsolescence refers to a reduction in value caused by changes in technology, design, or market demand.✓
- 4Depreciation and obsolescence are engineering terms representing identical physical deterioration processes.
Correct answer
Depreciation refers to a reduction in value caused by physical wear and tear, while obsolescence refers to a reduction in value caused by changes in technology, design, or market demand.
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