Sum of Years Digits Method

Sum-of-years' digits is a depreciation method that ends up in a more accelerated write-off than straight line, but less accelerated than that of the double-declining balance methodology. under this methodology, annual depreciation is determined by multiplying the depreciable cost by a series of fractions based on the total of the asset's useful life digits. The total of the digits is determined by using the formula (n2+n)/2, where n is equal to the useful lifetime of the asset.

Example: = Assets original cost of $1000,
useful life of 5 years
salvage value of $100, compute its depreciation schedule under sum of years digits method.
First, determine years' digits. For useful life of 5 years, the years' digits are: 5, 4, 3, 2, and 1.
Next, calculate the sum of the digits of years: 5+4+3+2+1=15
The sum of the digits can also be determined by using the formula n(n+1)/2 where n is equal to the useful life of the asset in years. The example would be shown as 5(5+1)/2=15
Depreciation rates are as follows:
5/15 for the 1st year,
4/15 for the 2nd year,
3/15 for the 3rd year,
2/15 for the 4th year, and
1/15 for the 5th year.

Total depreciable cost	Depreciation rate	Depreciation expense	Accumulated depreciation	Book value at end of year
				$1,000 (original cost)
900	5/15	300 (900 x 5/15)	300	700
900	4/15	240 (900 x 4/15)	540	460
900	3/15	180 (900 x 3/15)	720	280
900	2/15	120 (900 x 2/15)	840	160
900	1/15	60 (900 x 1/15)	900	100 (scrap value)