One component in estimating depreciation
by means of the observed condition
(breakdown) method. This type of
deterioration refers to those items that are
economically feasible to cure and therefore
customarily repaired or replaced by a
prudent property owner.
The term curable is used because it
would be economically sound for an owner to
correct the physical situation based on the
value of these repairs in light of
depreciation incurred by the current state
of the property. Curable depreciation can
arise either through physical deterioration
or functional obsolescence.
Example of Curable Depreciation
The cost to repaint the property
interior is $1,900 and the actual
depreciation in value due to the current
state of painting is $2,500. The curing of
this deterioration makes economic sense.
This situation should be contrasted with
incurable depreciation that applies to items
that are not economically sound to cure at
the time, since the cost of correcting the
condition is greater than the anticipated
increase in value.
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