On the contrary, WDV method is appropriate for the fixed assets whose repairs increase, as they get older like machinery, vehicles, etc. The SLM method is best for the fixed assets with negligible repairs and maintenance like leases.If a firm is using SLM method, then the amount of depreciation is initially lower while if the method of depreciation is WDV then in the beginning the amount of depreciation is higher.Conversely, the asset’s book value is not completely written off in written down value method. the asset value is reduced to zero or its salvage value. In straight line method, the book value of the asset is completely written off i.e.In contrast, the amount of depreciation in WDV method diminishes every year. The annual depreciation charge in SLM remains fixed during the life of the asset.On the other hand, in the written down value method, the calculation of depreciation is on the basis of written down value of the asset. In straight-line method, depreciation is calculated on the original cost.WDV is a method of depreciation in which a fixed rate of depreciation is charged on the book value of the asset, over its useful life. SLM is a method of depreciation in which the cost of the asset is spread uniformly over the life years by writing off a fixed amount every year.
The difference between SLM and WDV are explained in the given below points in detail
The following formula is used to determine the rate of depreciation under this method: Although, according to this method the value of the asset is not fully extinguished. So the depreciation charged in the initial years is higher as compared to the subsequent years. This method is also known as reducing balance or diminishing balance method where the annual charge of depreciation keeps on decreasing every year. The depreciation method in which a fixed percentage of the reducing balance is written off every year as depreciation, to reduce the fixed asset to its residual value at the end of its working life. The rate of depreciation can be calculated with the following formula: Definition of Written Down Value Method Although this is not possible in all circumstances. Under this method, a particular asset is expected to generate equal utility (economic benefits) during its useful life. This method is also known as fixed instalment method. Impact of repairs and depreciation on P&L A/cĪssets with negligible repairs and maintenance like leases, copyright.Īssets whose repairs increase, as they get older like machinery, vehicles etc.Ī method of depreciation in which a fixed amount is written off year on year, during the useful life of the asset, to reduce the value of the asset to zero or its scrap value at the end of its useful life is a straight line method. In this method, the cost of the asset is uniformly spread over the lifetime of the asset. Content: SLM Vs WDVĪ method of depreciation in which the cost of the asset is spread uniformly over the life years by writing off a fixed amount every year.Ī method of depreciation in which a fixed rate of depreciation is charged on the book value of the asset, over its useful life. Conversely, in written down value method (WDV), there is a fixed rate of depreciation which is applied to the opening balance of the asset every year. So, here we are going to throw light on the difference between SLM and WDV methods.
0 kommentar(er)
