## Overview of Depreciation & WDV Method

### What Is Depreciation?

Depreciation is an indicator of a decrease in the amount of any assets (i.e. products, goods, services) over a period of time.

### What Is the WDV (Written Down Value) Method?

**WDV** stands for Written Down Value method in terms of calculating depreciation. Two methods are frequently used to calculate depreciation.

- Straight Line Method (SLM)
- Written Down Value (WDV)

This method is also known as Diminishing Balance Method or Declining Balance Method.

**WDV Formula:**

**Written Down Value Method = (Cost of Asset – Salvage Value of the Asset) * Rate of Depreciation (%)**

## Common Uses of the WDV Method of Depreciation in Excel

In the sample dataset the initial cost of a specific asset of a company is $50000. The rate of depreciation is 20% and the residual value is $7000.

### Calculating Depreciation with the WDV Formula

In the dataset, the rate of depreciation is mentioned.

**Steps**:

- Here, select a cell to calculate depreciation and enter the WDV formula.

`=(C5-C6)*C7`

Here,

**C5**= Initial Cost**C6**= Residual Value**C7**= Rate of Depreciation

- Press
**ENTER**to see the result.

**Read More: **How to Calculate Straight Line Depreciation Using Formula in Excel

### Finding the Yearly Final Value with Depreciation

- Enter the following formula.

`=(C5-C6)-C8`

Here,

**C5**= Initial Cost**C6**= Residual Value**C8**= Depreciation

- Press
**ENTER**to see the result.

To find the final price after consecutive years, multiply the first year end price by the depreciation rate.

`=20%*D5`

Here,

**D5**= Final value after first year

By subtracting the depreciation cost from the first year’s final price, you will get the price after the 2nd year.

`=D5-C6`

Here,

**D5**= Final Price after 1^{st }year**C6**= Depreciation of 2^{nd }year

You can find the depreciation and year end value for consecutive years utilizing the depreciation and yearly final value of previous years.

*Note**: Here, the colored texts show the value used in determining the depreciation with the WDV formula.*

**Read More: **Calculate Sum of Years Digits Depreciation with Formula in Excel

## Practice Section

Practice here.

** Download Practice Workbook**

Download the practice book here.

**Related Articles**

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- How to Use MACRS Depreciation Formula in Excel
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- How to Calculate Double Declining Depreciation in Excel

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