Accelerated Depreciation Made Easy!
🎯 What is Sum of Years Digits (SYD)?
SYD is an accelerated depreciation method that writes off more in early years. It’s faster than straight-line but less aggressive than double-declining balance.
💡 How It Works:
For a 5-year asset: Sum = 1+2+3+4+5 = 15
For a 5-year asset: Sum = 1+2+3+4+5 = 15
Year 1: 5/15 | Year 2: 4/15 | Year 3: 3/15 | Year 4: 2/15 | Year 5: 1/15
Depreciation = (Cost – Salvage) × (Remaining Life ÷ Sum of Years)
🧮 Interactive SYD Calculator
📗 Using Excel’s SYD Function
=SYD(cost, salvage, life, period)
| Argument | Description |
|---|---|
| cost | Original cost of the asset |
| salvage | Value at end of useful life |
| life | Useful life in periods |
| period | Specific year to calculate (1, 2, 3…) |
Step-by-Step:
1
Setup: Put Cost in B2, Salvage in B3, Life in B4, Years in A7 down
2
Formula: In B7 type
=SYD($B$2,$B$3,$B$4,A7) then press Enter
3
Copy: Drag B7 down for all years
4
Accumulated: C7:
=B7, C8: =C7+B8, copy down
5
Book Value: D7:
=$B$2-C7, copy down
💡 Pro Tip: Press Ctrl+~ to view formulas! The period argument changes each row, creating the accelerated pattern. 🎯
📚 Practice Example
Equipment costs $10,000, salvage $1,000, life 8 years. What’s Year 1 depreciation?