Depreciation by Written Down Value Method: Format and Formula

The written down value method looks confusing only until you notice one pattern.

The rate stays the same.

The value on which the rate is applied keeps reducing.

That is the whole idea.

Under this method, depreciation is not calculated on the original cost every year. It is calculated on the written down value, also called book value, at the beginning of the year.

So the first year’s depreciation is the highest. After that, the depreciation amount usually reduces year by year.

Once this is clear, the format becomes simple. You only need to carry the closing value of one year as the opening value of the next year.

What Written Down Value Means

Written down value means the value of the asset after deducting depreciation already charged.

In simple words:

Written down value = Cost of asset - Depreciation charged till date

Example:

A machine costs Rs. 1,00,000.

Depreciation for the first year is Rs. 10,000.

So the written down value at the end of the first year is:

Rs. 1,00,000 - Rs. 10,000 = Rs. 90,000

For the second year, depreciation will be calculated on Rs. 90,000, not on Rs. 1,00,000.

This is why the method is also called the reducing balance method or diminishing balance method.

The Main Formula

The most important formula is:

Depreciation = Opening written down value x Rate of depreciation / 100

After calculating depreciation:

Closing written down value = Opening written down value - Depreciation

Then the closing written down value becomes next year’s opening written down value.

Why Depreciation Reduces Every Year

Let us say an asset costs Rs. 1,00,000 and depreciation is charged at 10 percent per year.

In the first year, 10 percent is charged on Rs. 1,00,000.

In the second year, 10 percent is charged on Rs. 90,000.

In the third year, 10 percent is charged on Rs. 81,000.

The percentage is always 10 percent, but the base amount keeps becoming smaller.

That is why depreciation reduces.

Year	Opening written down value	Depreciation at 10 percent	Closing written down value
1	Rs. 1,00,000	Rs. 10,000	Rs. 90,000
2	Rs. 90,000	Rs. 9,000	Rs. 81,000
3	Rs. 81,000	Rs. 8,100	Rs. 72,900

Notice the rhythm:

1,00,000 -> 90,000 -> 81,000 -> 72,900

Each year begins with last year’s closing value.

WDV Method vs Straight Line Method

Students often mix these two methods.

Here is the clean difference:

Point	Straight line method	Written down value method
Depreciation is calculated on	Original cost	Opening book value
Depreciation amount	Same every year	Reduces every year
Rate	Applied to cost	Applied to written down value
Asset value at the end	Can reach scrap value in a planned way	Usually keeps reducing but does not become zero by normal percentage
Best memory line	Same amount each year	Same rate, reducing value

The method is not difficult. The habit of applying the rate on original cost is what creates mistakes.

Why Businesses Use Written Down Value Method

Many fixed assets are more useful when they are new.

A new machine works faster. A new vehicle gives fewer repair problems. A new computer handles work better. As the asset gets older, repairs may increase and efficiency may reduce.

Written down value method charges more depreciation in the earlier years and less depreciation later.

This often matches the practical life of assets better.

The combined burden can also feel more balanced:

• earlier years: higher depreciation, lower repairs
• later years: lower depreciation, higher repairs

That is one reason this method is commonly used for assets like machinery, vehicles, and computers.

Basic Journal Entries

If depreciation is credited directly to the asset account, the entry is:

Particulars	Debit (Rs.)	Credit (Rs.)
Depreciation A/c Dr.	Amount
To Asset A/c		Amount

Narration: Being depreciation charged on asset.

Then depreciation is transferred to Profit and Loss Account:

Particulars	Debit (Rs.)	Credit (Rs.)
Profit and Loss A/c Dr.	Amount
To Depreciation A/c		Amount

Narration: Being depreciation transferred to Profit and Loss Account.

If Provision for Depreciation Account is maintained, the first entry changes to:

Particulars	Debit (Rs.)	Credit (Rs.)
Depreciation A/c Dr.	Amount
To Provision for Depreciation A/c		Amount

The calculation of depreciation does not change only because the recording method changes.

Standard Schedule Format

When you are asked to calculate depreciation for a few years, use this format:

Year	Opening WDV	Additions	Depreciation	Closing WDV
Year 1	Cost or opening value	Additions during year	Calculated depreciation	Closing value
Year 2	Previous closing value	Additions during year	Calculated depreciation	Closing value
Year 3	Previous closing value	Additions during year	Calculated depreciation	Closing value

For a simple question with no additions or sale, you can use a shorter version:

Year	Opening WDV	Depreciation	Closing WDV
1
2
3

This table is not just for presentation. It helps your working stay organised.

Solved Example 1: Full Year Depreciation

Question:

On April 1, 2026, a machine was purchased for Rs. 1,00,000. Depreciation is charged at 10 percent per annum under written down value method. Accounts are closed on March 31 every year. Calculate depreciation for three years.

Solution:

Since the machine was bought on April 1 and accounts close on March 31, each year is a full year.

Year ended	Opening WDV	Depreciation at 10 percent	Closing WDV
March 31, 2027	Rs. 1,00,000	Rs. 10,000	Rs. 90,000
March 31, 2028	Rs. 90,000	Rs. 9,000	Rs. 81,000
March 31, 2029	Rs. 81,000	Rs. 8,100	Rs. 72,900

Working:

Year 1 depreciation = 1,00,000 x 10 / 100 = Rs. 10,000
Year 2 depreciation = 90,000 x 10 / 100 = Rs. 9,000
Year 3 depreciation = 81,000 x 10 / 100 = Rs. 8,100

The important point is that the second year starts from Rs. 90,000, not Rs. 1,00,000.

Asset Account Format Under Direct Method

If depreciation is credited directly to the asset account, the Machine Account for the above example will look like this:

Machine Account
Debit Side	Rs.	Credit Side	Rs.
Apr. 1, 2026 To Bank A/c	1,00,000	Mar. 31, 2027 By Depreciation A/c	10,000
		Mar. 31, 2027 By Balance c/d	90,000
Total	1,00,000	Total	1,00,000

Next year:

Machine Account
Debit Side	Rs.	Credit Side	Rs.
Apr. 1, 2027 To Balance b/d	90,000	Mar. 31, 2028 By Depreciation A/c	9,000
		Mar. 31, 2028 By Balance c/d	81,000
Total	90,000	Total	90,000

This is the format students should understand:

• opening value appears on the debit side
• depreciation appears on the credit side
• closing value appears on the credit side as balance carried down
• next year, that closing value comes back as balance brought down

Solved Example 2: Asset Purchased During The Year

Question:

On July 1, 2026, furniture was purchased for Rs. 60,000. Depreciation is charged at 10 percent per annum under written down value method. Accounts are closed on March 31 every year. Calculate depreciation for the first two years.

Solution:

From July 1, 2026 to March 31, 2027, the furniture is used for 9 months.

First year depreciation:

60,000 x 10 / 100 x 9 / 12 = Rs. 4,500

Closing WDV:

60,000 - 4,500 = Rs. 55,500

Second year depreciation is for a full year on Rs. 55,500:

55,500 x 10 / 100 = Rs. 5,550

Year ended	Opening WDV	Period	Depreciation	Closing WDV
March 31, 2027	Rs. 60,000	9 months	Rs. 4,500	Rs. 55,500
March 31, 2028	Rs. 55,500	12 months	Rs. 5,550	Rs. 49,950

The next year begins with the reduced value, not the original purchase price.

Solved Example 3: Addition During The Year

Question:

Opening written down value of machinery on April 1, 2026 was Rs. 80,000. A new machine was purchased on October 1, 2026 for Rs. 40,000. Depreciation is charged at 10 percent per annum under written down value method. Accounts close on March 31. Calculate depreciation and closing value.

Solution:

There are two parts:

1. Old machinery: depreciation for full year.
2. New machinery: depreciation for 6 months.

Old machinery depreciation:

80,000 x 10 / 100 = Rs. 8,000

New machinery depreciation:

40,000 x 10 / 100 x 6 / 12 = Rs. 2,000

Total depreciation:

8,000 + 2,000 = Rs. 10,000

Closing WDV:

Opening WDV + Addition - Depreciation
80,000 + 40,000 - 10,000 = Rs. 1,10,000

Particular	Amount
Opening WDV of old machinery	Rs. 80,000
Add: New machinery purchased	Rs. 40,000
Less: Depreciation on old machinery	Rs. 8,000
Less: Depreciation on new machinery	Rs. 2,000
Closing WDV	Rs. 1,10,000

This is the correct way because each asset is depreciated only for the time it was used.

How To Calculate Rate If Rate Is Not Given

Most school questions give the rate.

Sometimes, the question gives cost, scrap value, and useful life, and asks you to find the rate under written down value method.

The formula is:

Rate = [1 - (Scrap value / Cost)^(1 / Useful life)] x 100

This formula may look heavy, but the idea is simple. The rate should reduce the asset from cost to scrap value over the useful life.

Example:

Cost of asset = Rs. 1,00,000

Scrap value = Rs. 51,200

Useful life = 3 years

Rate = [1 - (51,200 / 1,00,000)^(1 / 3)] x 100
Rate = [1 - (0.512)^(1 / 3)] x 100
Rate = [1 - 0.8] x 100
Rate = 20 percent

Check:

Year	Opening WDV	Depreciation at 20 percent	Closing WDV
1	Rs. 1,00,000	Rs. 20,000	Rs. 80,000
2	Rs. 80,000	Rs. 16,000	Rs. 64,000
3	Rs. 64,000	Rs. 12,800	Rs. 51,200

The closing value matches the scrap value.

Common Mistakes In WDV Questions

The first mistake is applying the rate on original cost every year.

That turns the answer into straight line style, even though the question asks for WDV.

The second mistake is forgetting the time period in the year of purchase.

If an asset is purchased on October 1 and accounts close on March 31, depreciation is for 6 months, not 12 months.

The third mistake is not carrying forward the closing written down value.

The closing value of one year becomes the opening value of the next year.

The fourth mistake is mixing up depreciation and closing value.

Depreciation is the amount charged for the year. Closing WDV is the value left after deducting depreciation.

The fifth mistake is ignoring additions.

If a new asset is purchased during the year, calculate depreciation on the old asset and the new asset separately.

A Simple Answer-Writing Format

When you solve WDV questions, write your answer like this:

1. State the method and rate.
2. Make the depreciation table.
3. Show workings for part-year amounts.
4. Write journal entries if asked.
5. Prepare the asset account if asked.

This keeps your answer clean and easy to check.

Here is a compact template:

Year	Opening WDV	Additions	Depreciation	Closing WDV

Use the additions column only when the question has new purchases during the year.

Practice Questions

Try these without looking back.

Question 1

Machinery was purchased for Rs. 2,00,000 on April 1, 2026. Depreciation is charged at 15 percent per annum under written down value method. Accounts close on March 31. Calculate depreciation for three years.

Question 2

Furniture was purchased for Rs. 90,000 on October 1, 2026. Depreciation is charged at 10 percent per annum under written down value method. Accounts close on March 31. Calculate depreciation for two years.

Question 3

Opening written down value of machinery on April 1, 2026 was Rs. 1,50,000. A new machine was purchased on January 1, 2027 for Rs. 60,000. Depreciation is charged at 20 percent per annum. Accounts close on March 31. Calculate total depreciation and closing WDV.

Question 4

An asset costing Rs. 1,00,000 is expected to have a scrap value of Rs. 64,000 after two years. Find the depreciation rate under written down value method.

Practice Answers

Answer 1

Year ended	Opening WDV	Depreciation at 15 percent	Closing WDV
March 31, 2027	Rs. 2,00,000	Rs. 30,000	Rs. 1,70,000
March 31, 2028	Rs. 1,70,000	Rs. 25,500	Rs. 1,44,500
March 31, 2029	Rs. 1,44,500	Rs. 21,675	Rs. 1,22,825

Answer 2

First year depreciation is for 6 months.

90,000 x 10 / 100 x 6 / 12 = Rs. 4,500

Second year depreciation is on Rs. 85,500 for a full year.

85,500 x 10 / 100 = Rs. 8,550

Year ended	Opening WDV	Period	Depreciation	Closing WDV
March 31, 2027	Rs. 90,000	6 months	Rs. 4,500	Rs. 85,500
March 31, 2028	Rs. 85,500	12 months	Rs. 8,550	Rs. 76,950

Answer 3

Old machinery depreciation:

1,50,000 x 20 / 100 = Rs. 30,000

New machinery depreciation for 3 months:

60,000 x 20 / 100 x 3 / 12 = Rs. 3,000

Total depreciation:

30,000 + 3,000 = Rs. 33,000

Closing WDV:

1,50,000 + 60,000 - 33,000 = Rs. 1,77,000

Answer 4

Rate = [1 - (64,000 / 1,00,000)^(1 / 2)] x 100
Rate = [1 - (0.64)^(1 / 2)] x 100
Rate = [1 - 0.8] x 100
Rate = 20 percent

So the depreciation rate is 20 percent per annum.

Check:

Year 1 closing value = 1,00,000 - 20,000 = Rs. 80,000
Year 2 closing value = 80,000 - 16,000 = Rs. 64,000

Final Summary

Written down value method is simple when you follow the value from year to year.

The rate remains fixed.

The opening written down value changes.

That changing value is the base for depreciation.

Remember this flow:

Opening WDV
- Depreciation for the year
= Closing WDV

Next year's opening WDV = Previous year's closing WDV

If you keep this flow clear, WDV questions become organised and predictable.

Frequently Asked Questions

What is written down value method of depreciation?

Written down value method is a method in which depreciation is charged at a fixed percentage on the opening book value of the asset. Since the book value reduces every year, the depreciation amount also usually reduces every year.

What is the formula for depreciation under written down value method?

The formula is Depreciation = Opening written down value x Rate / 100. If the asset is used for only part of the year, multiply the result by the number of months used divided by 12.

Why does depreciation reduce every year in WDV method?

Depreciation reduces because the same rate is applied on a smaller book value each year. The rate is constant, but the base amount keeps reducing after every year’s depreciation.

Is WDV calculated on cost or book value?

WDV depreciation is calculated on book value, also called written down value, at the beginning of the year. Only in the first year is this usually the original cost, if the asset was purchased at the beginning of the year.

What is the difference between WDV and straight line method?

In straight line method, depreciation is usually the same every year because it is based on original cost. In WDV method, depreciation usually decreases every year because it is based on the reduced book value.

How do we calculate depreciation if an asset is purchased during the year?

Calculate depreciation only for the period the asset was used. For example, if an asset is bought on October 1 and accounts close on March 31, depreciation is usually calculated for 6 months.

Does written down value become zero?

Under a fixed percentage WDV method, the asset value usually keeps reducing but does not become zero by normal percentage calculation. It may reach a planned scrap value if the rate has been calculated using cost, scrap value, and useful life.

Which assets are suitable for written down value method?

WDV method is often suitable for machinery, vehicles, computers, and similar assets that may give higher benefit in earlier years and need more repairs as they become older.

What is the journal entry for depreciation under WDV method?

If depreciation is credited directly to the asset, the entry is Depreciation A/c Dr. To Asset A/c. Then Profit and Loss A/c Dr. To Depreciation A/c is passed to transfer depreciation to Profit and Loss Account.