Enter the initial asset cost, depreciation rate, and number of years into the calculator to determine the written down value (WDV) of the asset.
WDV Depreciation Formula
The following formula is used to calculate the written down value (WDV) of an asset.
WDV = P * (1 - r)^n
Variables:
- WDV is the written down value of the asset ($)
- P is the initial cost of the asset ($)
- r is the depreciation rate (expressed as a decimal)
- n is the number of years
To calculate the WDV, multiply the initial cost of the asset by one minus the depreciation rate raised to the power of the number of years.
What is WDV Depreciation?
Written Down Value (WDV) depreciation is a method of calculating the depreciation of an asset where the asset value is reduced by a fixed percentage each year. This method results in a larger depreciation expense in the earlier years of an asset's life and progressively smaller expenses as the asset's book value decreases. It is also known as the declining balance method or reducing balance method.
How to Calculate WDV Depreciation?
The following steps outline how to calculate the WDV Depreciation.
- First, determine the initial cost of the asset (P).
- Next, determine the depreciation rate (r) as a percentage.
- Convert the depreciation rate from a percentage to a decimal for calculation.
- Determine the number of years (n) the asset will be depreciated over.
- Use the formula WDV = P * (1 - r)^n to calculate the written down value.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Initial cost of the asset (P) = $10,000
Depreciation rate (r) = 20%
Number of years (n) = 5