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Written Down Value (WDV) is the net book value of an asset after accounting for depreciation. It is widely used in Indian accounting and taxation to reflect the asset’s reduced worth over time.
WDV refers to the asset’s original purchase cost minus the accumulated depreciation. It shows the current book value, not the market value. For example, if a machine was bought for ₹5,00,000 and ₹1,50,000 has been depreciated, the WDV is ₹3,50,000. Unlike market value, WDV is used for internal accounting and tax reporting.
The written down value method is also known as the diminishing balance method. Depreciation is charged on the asset’s current book value each year, not the original cost.
Depreciation reduces each year as the base value shrinks.
Commonly used for machinery, vehicles, and tools.
Recognised under Indian Income Tax Act for tax deductions.
This method reflects the actual wear and tear more accurately than flat-rate methods.
WDV is crucial for:
Tax Benefits: Higher depreciation in early years reduces taxable income.
True Asset Valuation: Reflects real-time asset usage and ageing.
Asset Replacement Decisions: Helps assess replacement timing and resale value.
Financial Reporting: Ensures compliance with accounting standards.
In India, WDV is preferred for fixed assets in both private and public sector accounting.
| Advantages | Disadvantages |
|---|---|
Reflects actual asset usage |
Asset value never reaches zero |
Higher depreciation in early years (tax saving) |
Complex calculations over time |
Aligns with declining utility of assets |
Uneven expense reporting across years |
Accepted by Indian tax authorities |
Not ideal for assets with uniform usage |
Formula:
WDV = Opening WDV × (1 – Depreciation Rate)
Cost: ₹1,00,000
Depreciation Rate: 10%
Year 1: ₹1,00,000 × (1 – 0.10) = ₹90,000
Year 2: ₹90,000 × (1 – 0.10) = ₹81,000
Year 3: ₹81,000 × (1 – 0.10) = ₹72,900
This method is easily applied using a written down value calculator or spreadsheet.
| Feature | WDV Method | Straight Line Method (SLM) |
|---|---|---|
Depreciation Style |
Reducing balance |
Equal amount each year |
Expense Pattern |
Higher in early years |
Uniform throughout asset life |
Use Case |
Machinery, vehicles |
Buildings, furniture |
Complexity |
Moderate to high |
Simple to apply |
Tax Preference (India) |
Accepted under Income Tax Act |
Less preferred for tax |
WDV is ideal when asset value declines faster in early years, while SLM suits consistent-use assets.
The written down value method offers a realistic view of asset depreciation and tax efficiency. However, it may not suit all businesses. Choosing between WDV and SLM depends on asset type, usage pattern, and compliance needs.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
WDV is a type of book value after depreciation. Book value may also include other adjustments.
Machinery, vehicles, and tools commonly use WDV for tax and accounting purposes.
Yes. In Indian taxation, WDV can become zero when assets are fully depreciated or disposed of.
It allows higher depreciation in early years, reducing taxable income and encouraging capital investment.
Using the formula: WDV = Opening WDV × (1 – Depreciation Rate), applied annually.
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