Question

What is the difference between the WDV method and the SLM method of depreciation?

Answer 1

Basis	Straight Line Method (SLM)	Written Down Value Method (WDV)
Calculation Basis	Depreciation is calculated on the Original Cost of the asset every year.	Depreciation is calculated on the Book Value/Written Down Value of the asset at the start of each year.
Annual Depreciation Amount	The amount of depreciation charged remains constant/equal every year.	The amount of depreciation charged decreases/declines year after year.
Asset Value at End of Life	The book value of the asset can be reduced to zero or its exact scrap value.	The book value of the asset never reduces to zero, even after its useful life ends.
Combined Burden on P&L	Total burden (Depreciation + Repairs) is unbalanced; it increases in later years as repair costs rise.	Total burden remains balanced/equal; lower depreciation in later years balances out higher repair costs.
Tax Recognition	It is generally not recognized/preferred by the Income Tax Authorities.	It is widely recognised and approved by the Income Tax Act for tax calculations.
Suitability	Suitable for assets where repair costs are low, and obsolescence is rare (e.g., Land & Buildings, Patents).	Suitable for assets that require heavy repairs and face rapid technological changes (e.g., Machinery, Vehicles, Computers).
Computerised Accounting Function	Automated using the =SLN() function in spreadsheets.	Automated using the =DB() or =DDB() functions in spreadsheets.