The answer is true. Physical wear and tear reduces an asset's value over time through physical depreciation. Economic depreciation, often known as the obsolescence, is the loss in value brought on by variables outside the control of the asset (or group of assets).
Such as shifts in the demand for or supply of the raw materials. The most noticeable type of depreciation is physical decay because, well, you can see it. Physical degeneration occurs when upkeep is not kept up with normal wear and tear. It is a value loss brought on by the effects of aging and the obsolescence elements.
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