Reading 43 - Replacement Cost Approach - Curable items

CFA Level II
#1

Peeps,

Can someone please explain why you should only deduct curable items (and exclude incurable items) from the replacement cost value? Is it because incurable items are assumed to be deducted later in the calculation of general depreciation?

Please note - curable items are items of physical deterioration where the benefit of fixing the problem is at least as much as the cost to cure.

Best,

Analyzer

#2

Incurable items will be included in the estimated age of the building (in increasing the age and thus reducing the value) if I recall correctly

#3

Makes sense