What determines whether physical deterioration is considered curable or incurable when discussing depreciation?

The classification of physical deterioration as curable or incurable hinges on a comparison between the cost of repair and the value that the repairs would add to the property. When a property experiences physical deterioration, it can often be addressed through repairs or renovations. If the cost to repair the deterioration is less than the increase in property value that the repairs would yield, the deterioration is deemed curable. This means that the investment in repairs will provide a positive return and enhance the overall value of the property.

Conversely, if the cost of repairs exceeds the value they would add, the deterioration is characterized as incurable. This situation typically occurs when the expenses associated with the repairs do not justify the resulting enhancement in property value. As such, the financial assessment is pivotal in determining the curability of the deterioration.

The other options do not directly influence the classification of deterioration. While the age of the property and location may affect overall value and desirability, they do not directly dictate whether the deterioration can be economically repaired, making the assessment of repair costs versus value added the most relevant criterion. Similarly, while potential sale price can reflect market conditions, it does not inherently determine the curability of underlying physical issues.