What term describes the loss of value due to factors that are no longer useful?

The term that describes the loss of value due to factors that are no longer useful is obsolescence. This concept refers specifically to the decline in value of an asset as it becomes outdated or less useful due to advancements in technology, changes in consumer preferences, or other external factors. For instance, a piece of machinery may become obsolete when newer, more efficient models are introduced, or an office building may lose value if businesses move to more modern locations with better amenities.

While depreciation is related to a decrease in value, it is a broader term that applies to the gradual reduction in value of an asset over time, typically for accounting purposes. Depreciation often accounts for physical wear and tear and is not solely concerned with utility or usefulness. Valuation pertains to assessing the worth of an asset but does not specifically address the concept of loss due to obsolescence. Amortization is the process of gradually paying off a debt or spreading out the cost of an intangible asset over its useful life and does not directly relate to the loss of value due to obsolescence.