Property Valuation and Depreciation Analysis

School: Toronto Metropolitan University - Course: REM 700 - Subject: Accounting

Toronto Met University REM700-021 Assignment 5 Prof. Kiana Basiri Thurs,Mar 16, 2023

1.Reproduction cost of the new structure = Area * Cost per unit of Area = 2700 Sqt * 125 + 500 sqt * 80 = 337,500 +40,000 = $377,500 2.Value of House = 780,000 - Site value = 780,000 - 200,000 = 580,000 Accrued Depreciation = Replacement cost - Value of House = 690,000 - 580,000 Accrued Depreciation = $110,000 Depreciation Percentage = Accrued Depreciation / Replacement cost = 110,000 / 690,000 = 15.94% Economic life = effective age / depreciation percentage Economic life = 45/15.94% Economic Life of the Home = 282.27 or 282 years Remaining Economic Life = Economic Life of the home - Effective Age of the home = 282 - 45 Remaining Economic Life of the Home = 237 years 3.Expected Economic Life = 110 years | Current Effective age = 90 years Cost New = $535,000 | Land Value = $150,000 Accrued Depreciation = Effective Age / Economic Life * Replacement cost Accrued Depreciation = 90 / 110 * 535,000 Accrued Depreciation using Age-Life method = $437,727.27 4.Sales comparison =$365,500 × .70 = $255,850; Cost- depreciation=$342,800 × .20 = $68,560; Income approach= $340,250 × .10 = $34,025. Total reconciliation estimate $255,850 + $68,560 + $34,025 = $358,435.