California Real Estate Practice Exam

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Study for the California Real Estate Exam with confidence. Engage with interactive questions designed to enhance your understanding of real estate principles, laws, and practices. Prepare thoroughly for your licensing test and ensure you have the knowledge to succeed in your real estate career!

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When considering depreciation, the concept of whether an item of physical deterioration is curable or incurable is a function of?

Its age
Its cost relative to the value it adds
The current market conditions
The skill of the appraiser

The correct answer is: Its cost relative to the value it adds

Depreciation is the decrease in value of an item over time, and it can be caused by physical deterioration. A crucial factor in determining whether an item's physical deterioration is curable or incurable is considering the cost relative to the value it adds. This means that if the cost of repairing the deterioration is higher than the value the item adds, it is considered incurable. On the other hand, if the cost is lower than the value it adds, it is considered curable. Option A, its age, is not a direct factor in determining the curability of physical deterioration. Option C, current market conditions, may play a role in determining the cost of repairs but is not the sole consideration. Option D, the skill of the appraiser, is not related to the concept of curability. Therefore, the correct answer is option B.