Calculating Depreciation Under WDV Method in Excel: Formula Explained
Did you know that businesses around the world lose an estimated $311 billion annually due to the improper calculation of depreciation? This staggering figure highlights the crucial importance of accurately calculating depreciation to maintain financial health and make informed business decisions.
Depreciation is a vital concept in accounting that represents the reduction in an asset’s value over time. The Written Down Value (WDV) method is a commonly used approach to calculate depreciation in Excel. This method involves applying a constant rate of depreciation to the Net Book Value (NBV) of an asset, resulting in a gradual reduction in its value.
Key Takeaways:
 The WDV method is a common approach to calculate depreciation in Excel.
 Accurate calculation of depreciation is crucial for businesses to make informed financial decisions.
 Improper calculation of depreciation can lead to substantial financial losses.
 The WDV method involves applying a constant depreciation rate to the Net Book Value (NBV) of an asset.
 By understanding and implementing the WDV formula correctly, businesses can accurately determine the value of their assets over time.
Understanding the WDV Method of Depreciation
The WDV (Written Down Value) method of depreciation is a commonly used technique to track the reduction in an asset’s value over time. It provides a more accurate representation of an asset’s value by reflecting its actual wear and tear. The WDV method involves applying a depreciation rate to the asset’s Net Book Value (NBV) at the beginning of each period.
Under the WDV method, the depreciation charges decrease each year, resulting in a gradual reduction in the asset’s value. This approach recognizes that assets tend to lose their value faster in the earlier years and at a decreasing rate in subsequent years. Consequently, the WDV method aligns with the economic reality of asset depreciation, making it a reliable method for financial reporting and planning.
Using the WDV method enables organizations to accurately calculate and account for the decrease in an asset’s value over its useful life. By applying a consistent depreciation rate to the asset’s NBV, businesses can assess the impact of depreciation on their financial statements, make informed decisions about asset replacement and upgrade, and comply with accounting standards.
Advantages of the WDV Method  Disadvantages of the WDV Method 



Understanding the WDV method of depreciation is essential for professionals involved in financial reporting, accounting, and asset management. By grasping this method’s concepts, individuals can accurately analyze the value of assets, make informed decisions, and ensure compliance with accounting standards.
The Formula for WDV Depreciation in Excel
To calculate depreciation under the WDV method in Excel, you can use the following formula:
WDV as on Date = Cost price x (1 – Dep Rate%) ^ (Date of WDV Calculation – Date of Purchase + 1)/365
This formula takes into account the cost price, the depreciation rate, and the time period between the date of the WDV calculation and the date of purchase. By substituting these values into the formula, you can accurately determine the WDV of an asset as of a specific date.
Example:
Let’s say you purchased a computer on January 1, 2020, for $2,000 with a depreciation rate of 20%. You want to calculate the depreciation as of December 31, 2022:
Cost price = $2,000
Depreciation rate = 20%
Date of Purchase = January 1, 2020
Date of WDV Calculation = December 31, 2022
Substituting these values into the formula:
WDV as on December 31, 2022 = $2,000 x (1 – 0.2) ^ (December 31, 2022 – January 1, 2020 + 1)/365
Calculations:
WDV as on December 31, 2022 = $2,000 x 0.8 ^ 731/365
WDV as on December 31, 2022 = $2,000 x 0.8 ^ 2
WDV as on December 31, 2022 = $2,000 x 0.64
WDV as on December 31, 2022 = $1,280
Summary:
Using the formula for WDV depreciation in Excel, you can accurately calculate the WDV of an asset as of a specific date. By plugging in the cost price, depreciation rate, and time period, you can determine the value of your asset over time. This calculation allows for effective financial planning and tracking of asset value.
See the table below for a visual representation of WDV depreciation calculations in Excel:
Date  Cost Price  Depreciation Rate  WDV Calculation  WDV as on Date 

January 1, 2020  $2,000  20%  WDV = $2,000 x (1 – 0.2) ^ (Date – January 1, 2020 + 1)/365  $2,000 
December 31, 2020  $2,000  20%  WDV = $2,000 x (1 – 0.2) ^ (Date – January 1, 2020 + 1)/365  $1,600 
December 31, 2021  $2,000  20%  WDV = $2,000 x (1 – 0.2) ^ (Date – January 1, 2020 + 1)/365  $1,280 
December 31, 2022  $2,000  20%  WDV = $2,000 x (1 – 0.2) ^ (Date – January 1, 2020 + 1)/365  $1,024 
Example of WDV Depreciation Calculation in Excel
Now that we have an understanding of the formula for calculating depreciation under the WDV method in Excel, let’s walk through an example to illustrate how it works.
Suppose you purchased a printer on 22/11/2012 for $16,800 with a depreciation rate of 40%. To calculate the depreciation for the financial year ending 31/03/2013, we can use the formula and calculate the depreciation amount for 130 days.
Using the formula:
WDV as on Date = Cost price x (1 – Dep Rate%) ^ (Date of WDV Calculation – Date of Purchase + 1)/365
Substituting the values into the formula:
WDV as on 31/03/2013 = $16,800 x (1 – 40%) ^ (131/365) = $10,846.82
Similarly, for the year ending 31/03/2014, we would calculate the depreciation amount based on the remaining value after subtracting the depreciation for the previous year.
By using the formula correctly, we can accurately calculate the depreciation amount for each period and keep track of the asset’s value over time.
Example Calculation:
Let’s create a table to showcase the depreciation calculation for the printer over the first few years:
Year  Date of WDV Calculation  Depreciation Period (Days)  Depreciation Amount  WDV as of Date 

2012  22/11/2012  –  –  $16,800.00 
2013  31/03/2013  130  $5,953.18  $10,846.82 
2014  31/03/2014  365  $3,618.50  $7,228.32 
2015  31/03/2015  365  $2,171.10  $5,057.22 
This table demonstrates how the depreciation amount and the WDV of the printer change over time. By following the formula and performing the calculations for each period, you can keep track of the asset’s value accurately.
A visual representation of the depreciation calculation can help in understanding the concept better. Remember, the formula and the table provide a stepbystep guide for accurately calculating depreciation under the WDV method in Excel.
Different Depreciation Methods in Excel
When it comes to calculating depreciation in Excel, there are multiple builtin methods available that can help you accurately determine the reduction in an asset’s value over time. Familiarizing yourself with these different methods and understanding their advantages and suitability for specific scenarios is essential for precise depreciation calculations.
StraightLine Depreciation
The straightline depreciation method is one of the most straightforward approaches. It evenly allocates the cost of an asset over its useful life, resulting in a constant depreciation expense each period.
SumofYears’ Digits Depreciation
In the sumofyears’ digits depreciation method, the depreciation expense gradually decreases each year. This method allocates a higher portion of the depreciation expense to the early years of an asset’s life.
Declining Balance Depreciation
Declining balance depreciation is an accelerated depreciation method. It applies a higher depreciation rate to the asset’s book value to recognize more significant depreciation during the early years and less in later years.
DoubleDeclining Balance Depreciation
Similar to the declining balance method, the doubledeclining balance depreciation method applies a higher depreciation rate. However, it doubles the depreciation rate used in the declining balance method, resulting in more significant depreciation during the early years.
UnitsofProduction Depreciation
The unitsofproduction depreciation method is ideal for assets whose value primarily depends on their level of productivity. It calculates depreciation based on the actual units produced or the hours of usage.
To gain a better understanding of the different depreciation methods in Excel, refer to the table below:
Depreciation Method  Description 

StraightLine  Allocates cost evenly over the asset’s useful life 
SumofYears’ Digits  Gradually decreases depreciation expenses each year 
Declining Balance  Applies a higher depreciation rate to the asset’s book value 
DoubleDeclining Balance  Applies a double depreciation rate to the declining balance 
UnitsofProduction  Calculates depreciation based on units produced or hours of usage 
By understanding and utilizing these different depreciation methods, you can accurately calculate the depreciation for your assets in Excel, enabling you to make informed financial decisions and effectively manage your assets.
Using the SLN, SYD, DB, and DDB Functions in Excel
Excel provides several builtin functions that make calculating depreciation easier and more efficient. These functions are specifically designed to support popular depreciation methods, including straightline, sumofyears’ digits, declining balance, and doubledeclining balance. By leveraging these functions, you can streamline your depreciation calculations and obtain accurate results.
SLN Function for StraightLine Depreciation
The SLN function in Excel is an essential tool for calculating straightline depreciation. It enables you to determine the depreciation expense for each period by evenly distributing the asset’s cost over its useful life. To use the SLN function, you need to provide the cost price, salvage value (if applicable), and the asset’s useful life in terms of periods. The SLN function will then calculate the depreciation expense per period automatically.
SYD Function for SumofYears’ Digits Depreciation
The SYD function in Excel facilitates the calculation of sumofyears’ digits depreciation. This method assumes that the asset’s value declines more rapidly in the initial years of its useful life. The SYD function requires the cost price, salvage value (if applicable), the asset’s useful life in terms of periods, and the period for which you want to calculate the depreciation expense. The SYD function will allocate larger depreciation amounts to earlier periods, reflecting the higher rate of depreciation during those years.
DB Function for Declining Balance Depreciation
The DB function in Excel is designed to calculate declining balance depreciation. This method assumes that the asset’s value declines at a constant rate each year. The DB function requires the cost price, salvage value (if applicable), the number of periods for which to calculate depreciation, and the depreciation rate per period. The DB function will calculate the depreciation expense for each period, with a decreasing value over time.
DDB Function for DoubleDeclining Balance Depreciation
The DDB function in Excel supports doubledeclining balance depreciation, which assumes that the asset’s value declines more rapidly in the earlier years. This method is often used for assets that experience higher wear and tear at the beginning of their useful life. The DDB function requires the cost price, salvage value (if applicable), the asset’s useful life in terms of periods, and the period for which you want to calculate the depreciation expense. The DDB function will allocate larger depreciation amounts to earlier periods, gradually reducing the depreciation expense over time.
By utilizing the SLN, SYD, DB, and DDB functions in Excel, you can simplify the process of calculating depreciation and ensure accurate results. These functions eliminate the need for manual calculations and provide a convenient way to apply different depreciation methods in your Excel worksheets.
Other Depreciation Methods and Examples in Excel
In addition to the builtin Excel functions, there are other depreciation methods that can be calculated in Excel. These methods provide alternative ways to calculate depreciation and may be more suitable for specific scenarios. Two such methods are the unitsofproduction method and the VDB function.
UnitsofProduction Method
The unitsofproduction method is commonly used for assets that have varying levels of productivity. This method calculates depreciation based on the usage or output of the asset rather than its timebased depreciation. It is particularly useful for assets such as machinery or vehicles, where the depreciation is directly linked to the number of units produced or miles driven.
To calculate depreciation using the unitsofproduction method in Excel, you need to determine the total units expected to be produced or the total miles expected to be driven over the asset’s useful life. Then, divide the asset’s cost by the total units or miles to determine the depreciation per unit or mile. Multiply the depreciation per unit or mile by the actual units or miles produced or driven to calculate the depreciation expense for a specific period.
Year  Units Produced/Driven  Depreciation per Unit/Mile  Depreciation Expense 

Year 1  5,000  $2  $10,000 
Year 2  4,000  $2  $8,000 
Year 3  3,500  $2  $7,000 
VDB Function
The VDB function in Excel calculates variabledeclining balance depreciation. This method allows for more flexibility in choosing the depreciation factor and can provide more accurate depreciation calculations. Unlike the traditional declining balance method, the VDB function allows for different depreciation rates based on customdefined factors.
The syntax for the VDB function is as follows:
=VDB(cost, salvage, life, start_period, end_period, [factor], [no_switch])
 Cost: The initial cost of the asset.
 Salvage: The expected value of the asset at the end of its useful life.
 Life: The useful life of the asset in periods.
 Start_period: The starting period for which depreciation will be calculated.
 End_period: The ending period for which depreciation will be calculated.
 Factor (optional): The depreciation factor to be applied. This can be used to modify the depreciation rate over time.
 No_switch (optional): A logical value indicating whether the calculation should switch to straightline depreciation after the period specified by the factor argument.
Using the VDB function, you can customize the depreciation calculation to better fit the characteristics of the asset and its expected depreciation pattern.
Conclusion
In conclusion, calculating depreciation under the WDV method in Excel requires a thorough understanding of the formula and the available functions. By following the stepbystep guide and utilizing the appropriate methods, you can accurately track and calculate the depreciation for your assets. Excel provides a range of options and tools that make the process more efficient and accurate.
With practice and familiarity, you can become proficient in calculating depreciation under the WDV method in Excel. It is important to stay updated with any changes in the formula or new features in Excel that can enhance your depreciation calculations. By continuously improving your knowledge and skills, you can ensure accurate and reliable depreciation calculations for your business or personal use.
Remember, accurate calculation of depreciation is crucial for financial reporting, tax purposes, and decisionmaking. By mastering the WDV method in Excel, you can confidently calculate depreciation and make informed decisions regarding your assets. So, start exploring Excel’s features, practice the formula, and enhance your depreciation calculation skills today!
FAQ
What is the WDV method of depreciation?
The WDV method of depreciation is a common technique used to track the reduction in an asset’s value over time. It involves applying a depreciation rate to the asset’s Net Book Value (NBV) at the beginning of each period.
How do I calculate depreciation under the WDV method in Excel?
To calculate depreciation under the WDV method in Excel, you can use the formula: WDV as on Date = Cost price x (1 – Dep Rate%) ^ (Date of WDV Calculation – Date of Purchase + 1)/365. By substituting the values into the formula, you can accurately determine the WDV of an asset as of a specific date.
Can you provide an example of WDV depreciation calculation in Excel?
Yes, for example, if you purchased a printer on 22/11/2012 for ,800 with a depreciation rate of 40%, you would calculate the depreciation amount for each financial year based on the remaining value after subtracting the depreciation for the previous year.
What are the different depreciation methods in Excel?
Excel offers several builtin depreciation methods, including straightline, sumofyears’ digits, declining balance, doubledeclining balance, and unitsofproduction depreciation.
How do I use the SLN, SYD, DB, and DDB functions in Excel for depreciation?
Excel provides builtin functions for these popular depreciation methods. The SLN function is used for straightline depreciation, the SYD function is used for sumofyears’ digits depreciation, the DB function is used for declining balance depreciation, and the DDB function is used for doubledeclining balance depreciation.
Are there other depreciation methods that I can calculate in Excel?
Yes, there are other depreciation methods, such as the unitsofproduction method and the VDB function for variabledeclining balance depreciation. These methods provide more flexibility in calculating depreciation based on varying levels of productivity.
What should I keep in mind when calculating depreciation under the WDV method in Excel?
It is important to have a thorough understanding of the formula and the available functions. By following a stepbystep guide and utilizing the appropriate methods, you can accurately track and calculate depreciation for your assets in Excel.
Vaishvi Desai is the founder of Excelsamurai and a passionate Excel enthusiast with years of experience in data analysis and spreadsheet management. With a mission to help others harness the power of Excel, Vaishvi shares her expertise through concise, easytofollow tutorials on shortcuts, formulas, Pivot Tables, and VBA.