SYD (Returns the sum-of-years' digits depreciation of an asset for a specified period)

What Does It Do?

This function calculates the depreciation of an item throughout its life, using the sum of the years digits.

The depreciation is greatest in the earlier part of the  items life.

What is the Sum Of The Years Digits ?

The sum of the years digits adds together the each of the years of the life.

A life of 3 years has a sum of 1+2+3 equalling 6.

Each of the years is then calculated as a percentage of the sum of the years.

Year 3 is 50% of 6, year 2 is 33% of 6, year 1 is 17% 6.

The total depreciation of the item is then allocated on the basis of these percentages.

A depreciation of Rs. 9000 is allocated as 50% being Rs. 4500, 33% being Rs. 3000, 17% being Rs. 1500.

As the greater part of the depreciation is allocated to the earliest years the values are inverted, year 1 is Rs. 4500, year 2 is Rs. 3000 and year 1 is Rs. 1500.

Example-1

1. Add together the digits of the Life to get the SumOfTheYearsDigits, 1+2+3=6.

2. Subtract the Salvage from the Purchase Price to get Total Deprectation, 10000-1000= 9000.

3. Divide the Total Deprectation by the SumOfTheYearsDigits, 9000/6=1500.

4. Invert the year digits, 1,2,3 becomes 3,2,1.

5. Multiply 3,2,1 by £1500 to get 4500, 3000,1500, these values are the depreciation    values for each of the three years in the life of the item.

Example-2

The same example using 4 years.

Example-3

This is example will adjust itself to accommodate any number of years between 1 and 10.

Syntax

=SYD(OriginalCost,SalvageValue,Life,PeriodToCalculate)

Formatting

No special formatting is required.