Which statement correctly differentiates replacement cost from reproduction cost?

• A. Replacement cost is the cost to reproduce an exact duplicate; Reproduction cost is the cost to replace with a structure of equivalent utility
• B. Replacement cost uses historical prices; Reproduction uses current prices
• C. Replacement cost is the cost at current prices to replace a building with one of equal utility; Reproduction cost is the cost at current prices to reproduce an exact duplicate
• D. Replacement cost ignores depreciation; Reproduction cost accounts for depreciation

Answer: (C)

Replacement cost focuses on what it would take today to build a structure that serves the same function and usefulness as the existing building, using current prices, but not necessarily in the same design or with the exact same materials. Reproduction cost, on the other hand, measures today’s cost to recreate an exact duplicate of the original structure, including its architectural details and materials. So the statement that explains replacement cost as the current-price cost to replace with a structure of equal utility and reproduction cost as the current-price cost to reproduce an exact duplicate captures the essential difference. The other options mix up these concepts or invoke depreciation or historical prices, which aren’t part of these definitions.