Accountancy · Ch 2 — Depreciation
Straight Line Method and Written Down Value Method Compared
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Straight Line Method and Written Down Value Method Compared
Both methods allocate an asset's cost over its useful life, but they differ in the base used, the pattern of the charge, and the situations they suit best.
| Basis of comparison | Straight Line Method (SLM) | Written Down Value Method (WDV) |
|---|---|---|
| Base for computing depreciation | Original cost, unchanged every year | Book value at the start of each year, which keeps reducing |
| Amount of depreciation each year | Equal, unchanging | Higher in early years, progressively lower later |
| Book value at the end of useful life | Reaches the estimated scrap value (or zero) exactly | Approaches zero but never reaches it exactly through the formula alone |
| Combined trend of depreciation plus repairs | Rises over the asset's life, since flat depreciation is joined by rising repair costs as the asset ages | Stays relatively level, since falling depreciation broadly offsets rising repair costs |
| Best suited to | Assets ageing evenly with limited rising maintenance needs — leasehold assets, patents, furniture | Assets whose repair costs climb noticeably as they age — plant, machinery, vehicles |
| Recognised for Income Tax computation in India | No | Yes, for most classes of assets |
Neither method is universally "better" — the right choice depends on how a specific asset's usefulness and maintenance costs genuinely behave over its life. Once a business selects a method for a class of assets, it should apply that method CONSISTENTLY, year after year; switching methods midway is treated as a change in accounting estimate and requires proper disclosure, along with a recomputation of the effect on past years' depreciation. …