Written-Down Value

Search Dictionary

Definition of 'Written-Down Value'

Written-down value (WDV) is an accounting term that refers to the value of an asset after it has been partially or fully depreciated. The WDV is calculated by subtracting the accumulated depreciation from the original cost of the asset.

For example, if an asset is purchased for $100,000 and has been depreciated by $20,000, its WDV would be $80,000.

The WDV is important because it is used to determine the amount of depreciation expense that can be claimed in future periods. The lower the WDV, the lower the depreciation expense, and the higher the taxable income.

WDV can also be used to determine the fair market value of an asset. The fair market value is the price that an asset would sell for in an open and competitive market.

In some cases, the WDV may be greater than the fair market value of an asset. This can happen if the asset has been damaged or if its useful life has been shortened.

If the WDV is greater than the fair market value, the asset is considered to be impaired. An impairment loss is recorded in the income statement to reflect the decline in value of the asset.

The WDV is a key concept in accounting for depreciation and impairment. It is important to understand how WDV is calculated and how it is used in financial reporting.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.