Depreciation schedules must reflect differences in building types derived from which source?

Building depreciation schedules are essential for accurately assessing property values and understanding how different factors affect assets over time. The correct answer reflects that depreciation must be influenced primarily by market factors.

Market analysis provides insights into how various building types perform financially based on current and projected economic conditions, comparable property sales, and trends in the local area. By considering the market, appraisers can account for unique attributes of different building types, such as their location, age, condition, and the demand for those types of properties. This enables the development of a depreciation schedule that accurately represents how market influences affect a property's worth over time.

Sales data can inform some aspects of depreciation, but it primarily gives a snapshot of past transactions rather than a broader understanding of ongoing market trends. Government regulations may set guidelines around depreciation but do not offer specific insights into the differences between building types. Similarly, construction manuals provide information about building materials and standards rather than current market-based depreciation rates.