California Real Estate Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Master the California Real Estate Exam with our comprehensive practice quiz. Get expert tips, detailed content review, and insider strategies to pass on your first try.

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

In the cost approach, what is done with accrued depreciation?

It is ignored
It is added to the replacement or reproduction cost
It is deducted from the replacement or reproduction cost
It is multiplied by the economic life

The correct answer is: It is deducted from the replacement or reproduction cost

In the cost approach, accrued depreciation is deducted from the replacement or reproduction cost of the property. This is because accrued depreciation reflects the reduction in value due to wear and tear, obsolescence, or other factors. Therefore, it is considered a cost that has already been incurred and is subtracted from the total cost of replacement or reproduction. Option A is incorrect because accrued depreciation is an important consideration in determining the final value of the property. Option B is incorrect because adding it to the replacement or reproduction cost would overestimate the value of the property. Option D is incorrect because multiplying it by the economic life would not accurately reflect the impact of depreciation on the property's value.