This is the method used in the Construction Cost Manual prescribed by the Arizona Department of Revenue, for many building components. These allow the appraiser to make adjustments for individual components for various types of structures. This method produces a value based on the floor area of the structure. The cubic foot method is used when the wall height varies within a building class, such as warehouses or factories. Generally the square foot or cubic foot methods are not considered sufficiently accurate compared to the first two methods for estimating cost.
Depreciation is defined as a loss in value due to any cause.
Land does not depreciate, only Improvements. Land may suffer value loss, but not due to depreciation. Physical deterioration , as the name implies, is a loss in value due to normal aging and deterioration. Economic obsolescence is caused by conditions outside the property such as economic changes, legal restrictions, development of new processes, etc. Regardless of the type of depreciation, it can be classified as either curable or incurable .