Home/Blog/WDV Method of Depreciation — CA Foundation | Written Down Value

WDV Method of Depreciation — CA Foundation | Written Down Value

31 May 2026·6 min read·By CA Saarthi Team

wdv in accountingwritten down value methodwdv vs slmwdv depreciation formulawdv method ca foundation

What Is the WDV Method?

WDV stands for Written Down Value. Under the Written Down Value method of depreciation (also called the Reducing Balance or Diminishing Balance method), depreciation is charged at a fixed percentage on the opening book value of the asset each year — not on the original cost. Because the book value reduces every year, the depreciation amount also falls year after year.

This is a core topic in CA Foundation Paper 1 (Accounting), in the Depreciation and Amortisation chapter, and it is almost always tested alongside the Straight Line Method (SLM).

WDV Formula

Depreciation for the year = Opening Book Value (WDV) × Rate of depreciation

The opening book value for the next year = previous book value − depreciation charged.

If you know the cost, the residual (scrap) value, and the useful life, the WDV rate can be found using:

Rate = [1 − (Scrap Value / Cost) ^ (1/n)] × 100, where n = useful life in years.

In most CA Foundation problems the rate is given, so you simply apply the percentage to the reducing balance each year.

Solved Example

A machine costs Rs. 1,00,000 and is depreciated at 10% p.a. under the WDV method.

**Year 1:** Depreciation = 1,00,000 × 10% = Rs. 10,000, book value = Rs. 90,000

**Year 2:** Depreciation = 90,000 × 10% = Rs. 9,000, book value = Rs. 81,000

**Year 3:** Depreciation = 81,000 × 10% = Rs. 8,100, book value = Rs. 72,900

Notice how the depreciation amount keeps falling (10,000, then 9,000, then 8,100), even though the rate stays the same at 10%.

Journal Entries for WDV Depreciation

The entries are the same as for any depreciation method; only the amount differs each year.

To charge depreciation: **Depreciation A/c Dr.** To Asset A/c (or to Provision for Depreciation A/c)

To transfer depreciation to Profit & Loss: **Profit & Loss A/c Dr.** To Depreciation A/c

If a Provision for Depreciation account is maintained, the asset is shown at original cost and the accumulated depreciation is held in the provision account; the asset's net book value = cost − provision.

WDV vs SLM — The Key Differences

**Basis:** SLM charges depreciation on the **original cost**; WDV charges it on the **reducing book value**.

**Amount:** Under SLM the depreciation is the **same every year**; under WDV it **decreases every year**.

**Asset value:** Under SLM the book value can reach zero (or scrap value); under WDV the book value **never becomes zero** (it only approaches it).

**Suitability:** WDV suits assets that lose value faster early and need more repairs later (machinery, vehicles), so the **total of depreciation + repairs stays more even** over the asset's life.

**Income Tax Act:** Indian tax law generally prescribes the **WDV method** (block of assets), which is why it matters in practice.

When Is WDV Preferred?

WDV is preferred when an asset gives more service in its early years and when repair costs rise as the asset ages. Charging higher depreciation early (WDV) balances the lower repairs early and higher repairs later, giving a more even total charge to Profit & Loss each year.

ICAI Exam Questions on WDV

Typical CA Foundation questions ask you to:

Prepare the **Asset Account** (or Machinery Account) for 2-3 years under WDV.

**Compare** SLM and WDV for the same asset.

Calculate depreciation when an asset is **bought or sold mid-year** (charge depreciation only for the months used).

Find profit or loss on sale of the asset using its WDV book value.

Quick Revision

WDV = Written Down Value = depreciation on the **reducing balance** at a fixed rate.

Depreciation falls each year; book value never quite reaches zero.

SLM = fixed amount on cost; WDV = falling amount on book value.

The Income Tax Act uses the WDV (block of assets) method.

Practise WDV and SLM problems side by side on CA Saarthi to master the depreciation chapter.

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Home/Blog/WDV Method of Depreciation — CA Foundation | Written Down Value

WDV Method of Depreciation — CA Foundation | Written Down Value

31 May 2026·6 min read·By CA Saarthi Team

wdv in accountingwritten down value methodwdv vs slmwdv depreciation formulawdv method ca foundation

What Is the WDV Method?

This is a core topic in CA Foundation Paper 1 (Accounting), in the Depreciation and Amortisation chapter, and it is almost always tested alongside the Straight Line Method (SLM).

WDV Formula

Depreciation for the year = Opening Book Value (WDV) × Rate of depreciation

The opening book value for the next year = previous book value − depreciation charged.

If you know the cost, the residual (scrap) value, and the useful life, the WDV rate can be found using:

Rate = [1 − (Scrap Value / Cost) ^ (1/n)] × 100, where n = useful life in years.

In most CA Foundation problems the rate is given, so you simply apply the percentage to the reducing balance each year.

Solved Example

A machine costs Rs. 1,00,000 and is depreciated at 10% p.a. under the WDV method.

**Year 1:** Depreciation = 1,00,000 × 10% = Rs. 10,000, book value = Rs. 90,000

**Year 2:** Depreciation = 90,000 × 10% = Rs. 9,000, book value = Rs. 81,000

**Year 3:** Depreciation = 81,000 × 10% = Rs. 8,100, book value = Rs. 72,900

Notice how the depreciation amount keeps falling (10,000, then 9,000, then 8,100), even though the rate stays the same at 10%.

Journal Entries for WDV Depreciation

The entries are the same as for any depreciation method; only the amount differs each year.

To charge depreciation: **Depreciation A/c Dr.** To Asset A/c (or to Provision for Depreciation A/c)

To transfer depreciation to Profit & Loss: **Profit & Loss A/c Dr.** To Depreciation A/c

WDV vs SLM — The Key Differences

**Basis:** SLM charges depreciation on the **original cost**; WDV charges it on the **reducing book value**.

**Amount:** Under SLM the depreciation is the **same every year**; under WDV it **decreases every year**.

**Asset value:** Under SLM the book value can reach zero (or scrap value); under WDV the book value **never becomes zero** (it only approaches it).

**Suitability:** WDV suits assets that lose value faster early and need more repairs later (machinery, vehicles), so the **total of depreciation + repairs stays more even** over the asset's life.

**Income Tax Act:** Indian tax law generally prescribes the **WDV method** (block of assets), which is why it matters in practice.