A rental property is located on a street that the city decides to widen. As a result of the street construction, the property's rental income is lowered by 10%. What type of depreciation has occurred?
A. Physical deterioration
B. Deferred maintenance
C. Functional obsolescence
D. External obsolescence
Answer: D. External obsolescence
Explanation: External obsolescence is caused by factors external to the property, such as city action. Functional obsolescence and physical deterioration (including deferred maintenance) are problems specific to the property.
Business
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