Full formBusiness & Corporate
WDVstands forWritten Down Value
Full Form of WDV
What is WDV?
Written Down Value (WDV) is a method of calculating depreciation on fixed assets, widely used in Indian accounting and taxation. Under this method, depreciation is charged at a fixed percentage on the asset's book value at the beginning of each financial year, resulting in a decreasing depreciation expense over the asset's useful life. The WDV method is prescribed under the Income Tax Act, 1961, for computing depreciation on most tangible assets, except for certain cases where the Straight Line Method (SLM) is allowed. Businesses in India commonly use WDV for financial reporting and tax compliance because it reflects the asset's diminishing utility and provides a higher tax shield in the early years of operation. The method is particularly relevant for assets that suffer higher wear and tear initially, such as machinery and vehicles. It is also a key concept in corporate finance and cost accounting. For students preparing for CA, CMA, CS, or MBA exams, understanding WDV is essential as it frequently appears in questions on depreciation, tax calculation, and financial statement analysis. In summary, WDV is a foundational concept in Indian asset valuation and tax planning.
WDV का फुल फॉर्म
लिखित अवमूल्यन मूल्य
Example
The company depreciates its machinery using the WDV method at 15% per annum, as per the Income Tax Act.
WDV — frequently asked questions
What is the full form of WDV?
WDV stands for Written Down Value, which is a method of calculating depreciation commonly used in Indian accounting and tax laws.
How is depreciation calculated under the WDV method?
Under the WDV method, depreciation is calculated by applying a fixed percentage to the asset's net book value at the start of each year. The formula is: Depreciation = WDV at beginning × Rate of depreciation.
What is the difference between WDV and SLM methods?
WDV (Written Down Value) results in higher depreciation in early years and lower in later years, while SLM (Straight Line Method) charges equal depreciation every year. WDV is preferred for tax purposes in India for most assets.