SLM and WDV are two popular methods of determining depreciation (which is the technique for writing off the value of an asset during its useful life time). SLM is also known as the Straight Line Method and in this method depreciation is charged evenly across each accounting period. In other words, we can say that the same amount of money is depreciated each year from the value of the assets in this method.
In the WDV or Written Down Value Method, a fixed percentage of the reducing balance is depreciated from the value of the assets, which results in the asset being reduced to its residual value at the end of its useful life. Here, the initial depreciation charged is higher and the following depreciations charged are lesser.
Let us look at some of the points of difference between the two methods Straight Line Method (SLM) and Written Down Value Method (WDV)
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Straight Line Method (SLM) |
Written Down Value Method (WDV) |
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Definition |
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It is a method of calculating depreciation where a fixed amount of depreciation is charged to the assets |
It is a method of calculating depreciation where there is a fixed rate of interest that is charged to the assets |
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Rate of Depreciation |
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Differs as the value of depreciation charged is constant |
Rate of depreciation charged is constant every year till assets useful life |
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Asset Value |
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Fully becomes zero |
Does not become zero |
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Written Off |
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Written off completely |
Does not get written off completely |
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Depreciation charged |
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It is initially lower |
It is relatively higher |
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Ease of understanding |
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Easier to understand and determine depreciation |
It is a little more complicated than the straight line method |
This article was all about the topic of Difference between SLM and WDV, which is an important topic for Commerce students. For more such interesting articles, stay tuned to BYJU’S.
FAQ’S
Frequently Asked Questions on Difference between SLM and WDV
1. What is the easiest method of calculating depreciation?
Straight Line Method is the easiest method of calculating depreciation of any asset.
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