18.5.2. Written Down Value (WDV) Method

Try these first

1. 1.

   What is the formula for calculating depreciation using the WDV method?

   Hint

   Think about what factors you need to multiply.

2. 2.

   What happens to the book value after calculating depreciation?

   Hint

   After calculating, what do you do next?

3. 3.

   What method calculates depreciation based on a fixed percentage of book value?

   • Straight Line Method
   • Written Down Value Method
   • Sum of Years' Digits Method

   Hint

   Remember the method that focuses on the value at the year start.

4. 4.

   In the first year of using WDV, will depreciation usually be higher or lower than a straight-line approach?

   • Higher
   • Lower

   Hint

   Think about how quickly assets lose value initially.

5. 5.

   An equipment valued at $20,000 has a depreciation rate of 15%. What will the book value be after three years?

   Hint

   Apply the percentage decrease each year to the updated book value.

6. 6.

   A fleet of vehicles are bought for $150,000 and depreciate at 25%. If after one year the company wants to sell them, what will be their value?

   Hint

   What is 25% of the total value?