हिंदी

Fixed Instalment Method vs. Written Down Value Method

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  • Comparison
Maharashtra State Board: Class 11

Comparison

Basis Fixed Instalment Method (SLM) Written Down Value Method (WDV)
Meaning Depreciation per year stays fixed Depreciation per year keeps reducing
Calculation On the original cost of the asset On the book value after previous years
Depreciation Amount Same amount every year Decreases year by year
Asset’s Value at End Can be reduced to scrap/zero value Never becomes zero (keeps reducing)
Profit Impact Equal effect each year Lower profits early, higher profits later
Recognition by Tax/Law Not usually accepted by tax law Accepted by tax law
Suitability Furniture, buildings (steady use) Machinery, vehicles (high initial use)
Depreciation Curve Parallel to X-axis (straight line) Slopes downward (decreasing curve)
Other Names Straight Line, Original Cost Method Diminishing, Reducing Balance Method
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