amcount.com - Assessee, definition of Assessee, person, type of assessee, person as per Income tax law

WRITTEN DOWN VALUE METHOD: Abbreviated as WDV method or sometimes as REDUCING BALANCE method.

Ex: M/s XYZ had the following assets shown in it's Balance Sheet AS ON 31.03.2011, here depreciation is calculated for the period of 01.04.2008 to 31.03.2011 for better understanding of WDV method.

Particulars	Rs.	Rate Of Depreciation	Depreciation (31.03.09)	WDV as on 31.03.09	Depreciation (31.03.10)	WDV as on 31.03.10	Depreciation (31.03.11)	WDV as on 31.03.11
MACHINERY COMPUTERS FURNITURE OFFICE EQUIPMENTS	1,000,000.00 350,000.00 200,000.00 75,000.00	15% 60% 10% 15%	150,000.00 210,000.00 20,000.00 11,250.00	850,000.00 140,000.00 180,000.00 63,750.00	127,500.00 84,000.00 18,000.00 9,562.50	722,500.00 56,000.00 162,000.00 54,187.50	108,375.00 33,600.00 16,200.00 8,128.13	614,125.00 22,400.00 145,800.00 46,059.38
TOTAL	1,625,000.00		391,250.00	1,233,750.00	239,062.50	994,687.50	166,303.13	828,384.38

Explanation:

In case of WDV method, Depreciation is calculated on the brought forward balance from previous year of each asset and this continues till the asset is either discarded or is sold off, or the WDV comes down to a negligible value.

STRAIGHT LINE METHOD: Abbreviated as SLM method or sometimes as ORIGINAL COST method.

Ex: M/s XYZ had purchased the following assets for commencing their new business from 01.04.2008 to 31.03.2011.

Particulars	Rs.	Rate Of Depreciation	Depreciation (31.03.09)	Depreciation (31.03.10)	Depreciation (31.03.11)
MACHINERY COMPUTERS FURNITURE OFFICE EQUIPMENTS	1,000,000.00 350,000.00 200,000.00 75,000.00	15% 60% 10% 15%	150,000.00 210,000.00 20,000.00 11,250.00	150,000.00 210,000.00 20,000.00 11,250.00	150,000.00 210,000.00 20,000.00 11,250.00
TOTAL	1,625,000.00		391,250.00	391,250.00	391,250.00

Explanation :

Unlike in case of WDV method, here the Depreciation is calculated right at the Inception stage of the asset, i.e. at the purchase stage itself the depreciation is calculated and the asset is depreciated by the same amount till it gets fully written off or is sold or discarded.