The value of an asset after accounting for depreciation or amortization, representing its remaining book value on the balance sheet.
Written Down Value (also called Book Value or Net Book Value) is the original cost of an asset minus all accumulated depreciation charged to date. It's the value at which the asset appears on the balance sheet. WDV decreases each year as depreciation is charged. Under the WDV Method of depreciation (mandated by Indian Income Tax Act), a fixed percentage is applied to the opening WDV each year, resulting in declining depreciation amounts. WDV is important for: calculating profit/loss on asset sale (Sale Price – WDV), determining block of assets for tax purposes, and insurance claims.
Machine purchased for ₹10,00,000. Depreciation rate (WDV): 15%. Year 1: Dep = ₹10,00,000 × 15% = ₹1,50,000, WDV = ₹8,50,000. Year 2: Dep = ₹8,50,000 × 15% = ₹1,27,500, WDV = ₹7,22,500. Year 3: Dep = ₹7,22,500 × 15% = ₹1,08,375, WDV = ₹6,14,125. If sold in Year 3 for ₹7,00,000: Profit on sale = ₹7,00,000 – ₹6,14,125 = ₹85,875.
Ensures accurate financial reporting and record-keeping
Helps maintain regulatory and tax compliance
Enables better-informed business decisions
Improves operational efficiency and cash flow management
WDV is mandatory for Indian Income Tax purposes (you have no choice). But it's also tax-advantageous: WDV gives HIGHER depreciation in early years when the asset is new and most productive, providing a bigger tax shield upfront. SLM gives equal amounts each year. For financial reporting (Companies Act), you can choose either method.
Under WDV method, the value asymptotically approaches zero but technically never reaches it (each year's depreciation is a percentage of the reducing balance). In practice, when WDV becomes negligible (e.g., ₹1), the asset is either fully written off or kept at ₹1 as a token amount until physically disposed of. The ₹1 serves as a reminder that the asset still exists.
The systematic allocation of the cost of a tangible asset over its useful life, representing the decline in value due to wear, use, or obsolescence.
The systematic approaches used to allocate the cost of a tangible asset over its useful life.
A depreciation method that allocates an equal amount of an asset's cost as expense in each period of its useful life.
Long-term tangible assets owned by a business that are used in operations and not intended for sale, such as land, buildings, machinery, vehicles, and equipment.
The estimated value of an asset at the end of its useful life, representing what it could be sold for after depreciation is complete.
Let Laabam.One handle the complexity. From invoicing to GST filing, our ERP software makes accounting effortless.