IAAO Managers Practice Test

The calculation of the percentage of good condition of an asset is accurately represented by taking the effective age of the asset, dividing it by its economic life, and then subtracting that value from 100%. This method allows one to assess the remaining usefulness of the asset in relation to its total expected lifespan.

Effective age refers to the condition and functionality of an asset compared to its potential lifespan, while economic life is the estimated period during which the asset remains economically viable. By dividing the effective age by the economic life, one determines what proportion of the asset's life has already been utilized. Subtracting this fraction from 100% reveals the percentage that reflects the asset's remaining good condition. This measure is essential for property appraisal and management practices, as it helps stakeholders understand the current value and longevity of an investment.

The other approaches outlined do not correspond to this assessment. The method of economic life divided by total assessed value does not provide a measure of condition; rather, it gives a ratio that lacks context regarding wear and longevity. The division of total sales price by effective age does not reflect the asset's condition in terms of wear and economic viability but rather provides a different kind of metric unrelated to good condition assessment. Hence, the correct approach to find