Sum-of-Years' Digits is a depreciation method that results in a more accelerated write-off than straight line, but less than the declining-balance
method or double-declining-balance method. Under this method annual depreciation is determined by multiplying the Depreciable Cost by a fraction. The
numerator is the current year. The denominator is the sum of the years of the life of the asset. If the asset has a life of 5 years the denominator
would be 15 computed by 1+2+3+4+5. The first year’s depreciation would be 5/15 times the cost of the asset. The second year would be 4/15 times
the cost of the asset. The fifth year would be 1/15 times the cost of the asset. The sum of all the fractions equals 5/15 this gives us
a 100% depreciation. The Excel SYD function performs these computations for us.
The Syntax for the SYD function is:
= SYD(cost, salvage, life, period)
Argument  
|
Description
|
Cost |
The original cost of the asset |
Salvage |
The value of the asset at the end of its expected useful life |
Life |
The useful life of the asset. It is the number of periods over which the asset is being depreciated |
Period |
The period for which you want to calculate the depreciation |
The following formula would compute the Sum of the Years depreciation for the first year for an item that cost 10,000,
has a salvage value of 1000, and a useful life of 8 years.
=SYD(10000, 1000, 8, 1)
The following formula would compute the Sum of the Years depreciation for the third year for an item that
cost 19,000 has no salvage value, and a useful life of 10 years.
=SYD(19000,0,10, 3)
Practice for Sum of Years Digits
- Create a new worksheet named SYD
.
- Enter the worksheet data as shown below:
- Enter
=SYD(
in cell B7. Excel’s intellisense displays the list of arguments.
Click on cell B2 then press F4 to create
an absolute address. Enter a comma.
Click on cell B3 then press F4. Enter a comma.
Click on cell B4 then press F4. Enter
a comma.
Click on cell A7. Type a right parenthesis. Press Ctrl + Enter.
Using the AutoFill handle drag down through cell B11.
- The Accumulated Depreciation for the first year is the same as the depreciation for the first year.
Enter =B7
in cell C7 then press
Enter.
The Accumulated Depreciation for the following years is computed as the Accumulated Depreciation up to this time, plus the Depreciation
for the current year.
Enter =C7 + B8
in cell C8.
Using the AutoFill handle, drag down through cell C11.
- The Book Value is the Cost of the Asset minus the Accumulated Depreciation.
Enter =$B$2-C7
in cell D7 then press Ctrl + Enter.
Using
the AutoFill handle, drag down through cell D11.
- Press Ctrl + ~ to view your formulas. They should appear as those below.

- Press Ctrl + ~ to return to normal view. Your results should be as shown below.
