SLM vs WDV: Which Depreciation Method Should Your Company Use?
A side-by-side comparison of straight-line and written-down-value depreciation under the Companies Act 2013, with the WDV rate formula and its impact on profit and deferred tax.
Both the straight-line method (SLM) and the written-down-value method (WDV) are permitted under Schedule II. They write off the same depreciable amount over the same useful life — the difference is timing, and that timing changes your reported profit, your net block, and the deferred-tax picture.
How each method behaves
- SLM charges an equal amount every year: (cost − residual) ÷ useful life. Simple, predictable, and easy to explain to auditors.
- WDV charges a fixed percentage of the reducing book value, so depreciation is high early and low later. The rate is derived as 1 − (residual ÷ cost)^(1/life).
When SLM makes sense
SLM suits assets that deliver even economic benefit across their life — buildings, furniture, fit-outs. It smooths the P&L and keeps year-on-year comparisons clean.
When WDV makes sense
WDV suits assets that are most productive early and lose value fast — vehicles, IT equipment, some plant. Front-loading depreciation better matches the expense to the benefit, and it moves the book base closer to the income-tax WDV base, narrowing (though never eliminating) the deferred-tax difference.
Because AssetOS runs book depreciation and income-tax (WDV block) depreciation in parallel from one register, you can see the P&L and deferred-tax consequences of an SLM-vs-WDV policy immediately — no second spreadsheet to reconcile.