Difference between SLM and WDV

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)

Straight Line Method (SLM)

Written Down Value Method (WDV)

Definition

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

Rate of Depreciation

Differs as the value of depreciation charged is constant

Rate of depreciation charged is constant every year till assets useful life

Asset Value

Fully becomes zero

Does not become zero

Written Off

Written off completely

Does not get written off completely

Depreciation charged

It is initially lower

It is relatively higher

Ease of understanding

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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