Sum of year digits
The following formula is used for this method:
Current Period Depreciation = (Cost - Salvage Value) * [Factor]
The calculation factor depends upon the depreciation period and will change for each period based on the following formula, where n is the number of depreciation periods:
Fraction for first year = n / (1+2+3+4+5…n)
Fraction for second year = (n-1) / (1+2+3….n)
Fraction for third year = (n-2) / (1+2+3+…n)
Last Published Monday, August 28, 2023