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.
๐๐ก๐๐ญ ๐ข๐ฌ ๐๐ซ๐ข๐ญ๐ญ๐๐ง ๐๐จ๐ฐ๐ง ๐๐๐ฅ๐ฎ๐ ๐๐๐ญ๐ก๐จ๐?
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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 assetโs life and less depreciation in the later years of the assetโs life.
๐๐ซ๐ข๐ญ๐ญ๐๐ง ๐๐จ๐ฐ๐ง ๐๐๐ฅ๐ฎ๐ ๐๐๐ญ๐ก๐จ๐ ๐
๐จ๐ซ๐ฆ๐ฎ๐ฅ๐
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Written Down Value Method = (Cost of Asset โ Salvage Value of the Asset) * Rate of Depreciation (in %)
๐๐ซ๐ข๐ญ๐ญ๐๐ง ๐๐จ๐ฐ๐ง ๐๐๐ฅ๐ฎ๐ ๐๐๐ญ๐ก๐จ๐ ๐๐ฑ๐๐ฆ๐ฉ๐ฅ๐
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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 ๐๐ซ๐ข๐ญ๐ญ๐๐ง ๐๐จ๐ฐ๐ง ๐๐๐ฅ๐ฎ๐ ๐๐๐ญ๐ก๐จ๐, you can go to this ๐ฅ๐ข๐ง๐ค ๐ก๐๐ซ๐:- https://www.wallstreetmojo.com/written-down-value-method/
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