The sum of the years’ digits (SYD) depreciation method is used to depreciate an asset more quickly during the beginning of its life. Unlike under the straight-line method, depreciation expense is not the same for every depreciation period. Instead, depreciation is greater in the early periods and declines in each successive period.
See a table comparing the different depreciation methods.
To return the value of one period of the sum of the years’ digits depreciation expense.
cost– The acquisition cost of the asset. This cost includes the purchase price and other costs associated with its acquisition, such as freight and sales tax.
salvage– Amount you expect to receive in exchange for the asset at the end of its useful life. Typically, this is zero.
life– Length of time you expect the asset to be in service. This is given in the number of periods.
period– The period for which you are calculating depreciation expense.
You purchase an automobile for 36,000 and expect it to last three years and trade it in for 3,000.
|3||$3,000||salvage||money back at the end of life|
|4||3||life||number of periods for the useful life|
|5||1||period||which period the expense is for|
|Depreciation expense for the first period||$16,500|
|Depreciation expense for the second period||$11,000|
|Depreciation expense for the final period||$5,500|
Next, let’s say you purchase a laptop computer for €3,000. You expect it to last 36 months and be worth €150 at the end of the two years.
|Depreciation expense for month 11||€111|
Live Example in Sheets
In addition to these examples, go to this spreadsheet for a live version of the SYD function.