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Sum of Years' Digits Depreciation

Sum of years digits method is accelerated depreciation. Depreciation is taken as a fractional part of a sum of all the years. By way of example, if an asset has a life of 5 years the sum of years is added together: 1+2+3+4+5=15. The calculation of depreciation is: year as the numerator (in reverse order) and the sum of years as the denominator.

Year 1 depreciation would calculate as: 5/15 x depreciable cost, Year 2 is 4/15 x depreciable cost etc. Since the sum of all fractions will equal 15/15, the total depreciation over the life of an asset will be 1 x depreciable cost = depreciable cost.

Asset Value	$                             50,000
Salvage value	$                              5,000
Est useful life	7 yrs
Depreciable value	$50,000 - $5,000 = $45,000
Formula for denominator	1+2+3+4+5+6+7 = 28
Depreciation year 1	7 / 28 x ($50,000 - $5,000) =	11,250
Depreciation year 2	6 / 28 x ($50,000 - $5,000) =	9,643
Depreciation year 3	5 / 28 x ($50,000 - $5,000) =	8,036
Depreciation year 4	4 / 28 x ($50,000 - $5,000) =	6,429
Depreciation year 5	3 / 28 x ($50,000 - $5,000) =	4,821
Depreciation year 6	2 / 28 x ($50,000 - $5,000) =	3,214
Depreciation year 7	1 / 28 x ($50,000 - $5,000) =	1,607
Total depreciation		45,000