Which appraisal principle is represented in the cost approach of appraising?

The correct response highlights the principle of depreciation, which is central to the cost approach of appraising. In the context of appraisal, depreciation refers to the reduction in value of a property over time due to factors such as physical wear and tear, obsolescence, and external economic conditions.

When appraisers use the cost approach, they begin by estimating the cost to replace or reproduce the property, then deduct the estimated depreciation to arrive at the property's current value. This method relies on understanding how various influences can impact the building's longevity and overall appeal, hence making depreciation a critical factor in accurately assessing a property's worth.

In contrast, the other concepts do not align with the core tenets of the cost approach. Utilization pertains more to how a property is used rather than its valuation, conformity relates to a property’s coherence within its environment, and substitution deals with the idea that a property’s value is influenced by the cost of acquiring an equally desirable alternative. Thus, depreciation embodies the essence of the cost approach by quantifying how value diminishes over time, forming the basis of this appraisal method.