Written Down Value (WDV) method applies a fixed percentage rate to the reducing book value each year. Formula: Annual Depreciation = Book Value at Beginning of Year × Depreciation Rate %. The depreciation amount decreases each year, while the depreciation rate remains constant. This method is preferred under Indian Income Tax Act. WDV is suitable for assets that lose value rapidly in early years (vehicles, machinery, equipment). The method results in higher depreciation in earlier years, which is realistic for many assets. Book value calculation: Opening Book Value - Depreciation = Closing Book Value. Tax authorities in India prefer WDV because it matches asset usage patterns in many industries. To find depreciation rate when residual value is known: Residual Value = Cost × (1 - Rate)^Years. Partial period depreciation: Depreciation = Book Value × Rate × (Months/12). When asset is disposed, it creates gain or loss on sale. WDV can theoretically continue indefinitely without reaching zero; residual value becomes negligible. The method requires careful tracking of book values year-by-year. WDV is sometimes called Declining Balance Method. Exam tip: Practice creating detailed WDV schedules showing opening book value, depreciation, and closing book value for multiple years; master the rate formula; understand how to handle disposals with WDV.