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)`

`=SYD(19000,0,10, 3)`

- Create a new worksheet named SYD .
- Enter the worksheet data as shown below:
- Enter

in cell B7. Excel’s intellisense displays the list of arguments.**=SYD(**

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.