Q1:

The period of time over which a structure or a component of a property may be reasonably be expected to perform the function for which it was designed is called:

(1) the effective age

(2) the physical life expectancy

(3) the useful life

(4) the economic life

Q2:

The furnace in the apartment building is 15 years old and according to the builder contactor, the life expectancy is 20 years. The economic life of the building is estimated at 50 years. Under the breakdown method of depreciation, what is the most appropriate category for calculating the depreciation for the furnace?

(1) Physical curable deterioration

(2) Physical short-lived deterioration

(3) Physical long-lived deterioration

(4) Incurable functional obsolescence caused by deficiency