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QUANTITY SURVEYING & VALUATION More Related Content
What is depreciation and obsolescence?Definition: The monetary value of an asset decreases over time due to use, wear and tear or obsolescence. This decrease is measured as depreciation. Description: Depreciation, i.e. a decrease in an asset's value, may be caused by a number of other factors as well such as unfavorable market conditions, etc.
What is obsolescence value?Economic obsolescence (EO) is the loss of value resulting from external economic factors to an asset or group of assets. EO is often encountered in valuation work performed for financial reporting purposes, bankruptcy emergence and in other practice areas when dealing with companies in capital-intensive industries.
What is an example of obsolescence?Examples of Functional Obsolescence
Within the technology industry, the constantly changing parade of smartphones and the evolution of smartphone technology is another example of functional obsolescence. New smartphones are able to do more and include more features that make old ones functionally obsolete.
What is physical obsolescence?Physical obsolescence is the decline in a property's valuation due to physical depreciation or gross mismanagement. It is a given that there will be physical deterioration in all real estate assets over time, but it can be managed with a proactive maintenance and replacement program.
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