The Written-Down Value (WDV) is the value of an asset after accounting for depreciation. The WDV is the original cost of the asset, minus any accumulated depreciation.
The WDV is used in financial accounting to value assets for balance sheet purposes. The WDV is the value at which an asset is carried on the balance sheet after taking into account depreciation.
The WDV is important in financial accounting because it provides a clear picture of the value of an asset over its useful life. The WDV is also important for tax purposes, as it determines the amount of depreciation that can be claimed for tax purposes.
What's the difference between depreciation and amortization? The key difference between depreciation and amortization is that depreciation is used to allocate the cost of a tangible asset over its useful life, while amortization is used to allocate the cost of an intangible asset over its useful life.
Tangible assets are physical assets such as land, buildings, and machinery. Intangible assets are nonphysical assets such as patents, copyrights, and goodwill.
The allocation of the cost of a tangible asset over its useful life is called depreciation. The allocation of the cost of an intangible asset over its useful life is called amortization.
Both depreciation and amortization are non-cash expenses. This means that they are recorded on the income statement, but they do not involve any outflow of cash.
Depreciation is a process of allocating the cost of a tangible asset over its useful life. The amount of depreciation expense for each accounting period is determined by the depreciation method used.
The most common depreciation methods are the straight-line method and the declining balance method. Under the straight-line method, the depreciation expense is the same for each accounting period. Under the declining balance method, the depreciation expense is higher in the early years and decreases in later years.
Amortization is a process of allocating the cost of an intangible asset over its useful life. The amount of amortization expense for each accounting period is determined by the amortization method used.
The most common amortization methods are the straight-line method and the effective interest method. Under the straight-line method, the amortization expense is the same for each accounting period. Under the effective interest method, the amortization expense is higher in the early years and decreases in later years.
What are the 3 methods of depreciation?
1. The straight-line method is the simplest and most commonly used method of depreciation. Under this method, an equal amount of depreciation is recognized each year over the useful life of an asset.
2. The declining balance method results in greater depreciation in the early years of an asset's life and less depreciation in the later years. This method is often used for tax purposes, as it results in a larger deduction in the early years when the company is likely in a higher tax bracket.
3. The sum-of-the-years'-digits method results in a higher depreciation deduction in the early years and a lower deduction in the later years. This method is used when it is desirable to match the depreciation deductions with the expected pattern of revenues from the use of the asset.
What is the difference between book value and written-down value?
The book value of an asset is its original cost, less any accumulated depreciation, amortization, and impairment charges.
The written-down value of an asset is its book value, less any further depreciation, amortization, and impairment charges that have been incurred since the asset was acquired.
What is NPA and write-off?
NPA is an abbreviation for "non-performing asset." A non-performing asset is an asset that is not generating sufficient income to cover its debt service obligations. In other words, the asset is not "performing" up to expectations.
A write-off is an accounting term that refers to the decision to remove an asset from the balance sheet. This decision is usually made when the asset is deemed to be uncollectible or when it is no longer useful to the company. How is WDV value calculated? WDV value is calculated by subtracting the accumulated depreciation from the cost of the asset.