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

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

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.

๐–๐ก๐š๐ญ ๐ข๐ฌ ๐–๐ซ๐ข๐ญ๐ญ๐ž๐ง ๐ƒ๐จ๐ฐ๐ง ๐•๐š๐ฅ๐ฎ๐ž ๐Œ๐ž๐ญ๐ก๐จ๐?
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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.

๐–๐ซ๐ข๐ญ๐ญ๐ž๐ง ๐ƒ๐จ๐ฐ๐ง ๐•๐š๐ฅ๐ฎ๐ž ๐Œ๐ž๐ญ๐ก๐จ๐ ๐…๐จ๐ซ๐ฆ๐ฎ๐ฅ๐š
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Written Down Value Method = (Cost of Asset โ€“ Salvage Value of the Asset) * Rate of Depreciation (in %)

๐–๐ซ๐ข๐ญ๐ญ๐ž๐ง ๐ƒ๐จ๐ฐ๐ง ๐•๐š๐ฅ๐ฎ๐ž ๐Œ๐ž๐ญ๐ก๐จ๐ ๐„๐ฑ๐š๐ฆ๐ฉ๐ฅ๐ž
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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 โ€“

Depreciation = ($14,000 โ€“ $3,000) * 18%

Depreciation = $1,980

Calculation at end of the year can be done as follows โ€“

Value at End of Year = ($14,000 โ€“ $3,000) โ€“ $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 ๐–๐ซ๐ข๐ญ๐ญ๐ž๐ง ๐ƒ๐จ๐ฐ๐ง ๐•๐š๐ฅ๐ฎ๐ž ๐Œ๐ž๐ญ๐ก๐จ๐, you can go to this ๐ฅ๐ข๐ง๐ค ๐ก๐ž๐ซ๐ž:- https://www.wallstreetmojo.com/written-down-value-method/

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