Written Down Value Method(Example) | How to Calculate Depreciation under WDV Method? [Video]

In this video on Written Down Value Method, here we discuss how to calculate written down value (WDV) Depreciation along with practical examples and detail explanation.

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐖𝐫𝐢𝐭𝐭𝐞𝐧 𝐃𝐨𝐰𝐧 𝐕𝐚𝐥𝐮𝐞 𝐌𝐞𝐭𝐡𝐨𝐝?
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Written Down Value method is a depreciation technique which applies a constant rate of depreciation to the net book value of the assets each year thus recognizing more depreciation expenses in the early years of the asset’s life and less depreciation in the later years of the asset’s life.

𝐖𝐫𝐢𝐭𝐭𝐞𝐧 𝐃𝐨𝐰𝐧 𝐕𝐚𝐥𝐮𝐞 𝐌𝐞𝐭𝐡𝐨𝐝 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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Written Down Value Method = (Cost of Asset – Salvage Value of the Asset) * Rate of Depreciation (in %)

𝐖𝐫𝐢𝐭𝐭𝐞𝐧 𝐃𝐨𝐰𝐧 𝐕𝐚𝐥𝐮𝐞 𝐌𝐞𝐭𝐡𝐨𝐝 𝐄𝐱𝐚𝐦𝐩𝐥𝐞
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ABC Company purchased a $14,000 Machinery with a 3 year useful life and a residual value of $3,000. Depreciation rates are 18%.

Calculation of written down value (WDV) of depreciation using above formula can be done as follows –

Depreciation = ($14,000 – $3,000) * 18%

Depreciation = $1,980

Calculation at end of the year can be done as follows –

Value at End of Year = ($14,000 – $3,000) – $1,980

Value at End of Year = 9,020

Similarly, we can do the calculation as shown above for year 2 and 3.

To know more about the 𝐖𝐫𝐢𝐭𝐭𝐞𝐧 𝐃𝐨𝐰𝐧 𝐕𝐚𝐥𝐮𝐞 𝐌𝐞𝐭𝐡𝐨𝐝, you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞:- https://www.wallstreetmojo.com/written-down-value-method/

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