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Observed Condition (Breakdown) Method
A method of estimating accrued depreciation that separately considers and estimates the deductions for physical deterioration, functional obsolescence and economic obsolescence. These estimates are then added up to provide a lump some deduction from reproduction cost new.
 
Accrued depreciation is broken down and measured under the following classifications;
  • Physical deterioration - curable
  • Physical deterioration - short lived and long lived - incurable
  • Functional obsolescence - curable
  • Functional obsolescence - incurable
  • External (economic or locational) obsolescence
 
     
 
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