Depreciation by Sum of Year Digit Method Solution

STEP 0: Pre-Calculation Summary
Formula Used
Depreciation = (2*(Service Life-Number of Years in Actual Use+1))/(Service Life*(Service Life+1))*(Original Value of Assets at Start of Service-Salvage Value of Asset at End of Service)
da = (2*(n-a+1))/(n*(n+1))*(V-Vs)
This formula uses 5 Variables
Variables Used
Depreciation - Depreciation for a year refers to the amount by which the value of a tangible asset decreases over the course of a single year.
Service Life - Service Life refers to the estimated period during which the asset is expected to provide economic benefits and be used for its intended purpose.
Number of Years in Actual Use - Number of Years in Actual Use refers to the period of time during which a particular asset has been actively employed or utilized for its intended purpose in a business or operational context.
Original Value of Assets at Start of Service - Original Value of Assets at Start of Service Life Period refers to the initial cost or acquisition cost of a tangible asset when it is first put into service.
Salvage Value of Asset at End of Service - Salvage Value of Asset at End of Service Life refers to the amount that the asset is expected to be worth when it is retired or disposed of at the conclusion of its useful life.
STEP 1: Convert Input(s) to Base Unit
Service Life: 10 --> No Conversion Required
Number of Years in Actual Use: 3 --> No Conversion Required
Original Value of Assets at Start of Service: 50000 --> No Conversion Required
Salvage Value of Asset at End of Service: 5000 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
da = (2*(n-a+1))/(n*(n+1))*(V-Vs) --> (2*(10-3+1))/(10*(10+1))*(50000-5000)
Evaluating ... ...
da = 6545.45454545455
STEP 3: Convert Result to Output's Unit
6545.45454545455 --> No Conversion Required
FINAL ANSWER
6545.45454545455 6545.455 <-- Depreciation
(Calculation completed in 00.004 seconds)

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Depreciation Calculators

Fixed Percentage Factor using Matheson Formula
​ LaTeX ​ Go Fixed Percentage Factor = 1-(Salvage Value of Asset at End of Service/Original Value of Assets at Start of Service)^(1/Service Life)
Annual Depreciation by Straight-Line Method
​ LaTeX ​ Go Annual Depreciation per Year = (Original Value of Assets at Start of Service-Salvage Value of Asset at End of Service)/Service Life
Book Value of Process Equipment at any Time during Service Life
​ LaTeX ​ Go Asset Value = Original Value of Assets at Start of Service-Number of Years in Actual Use*Annual Depreciation per Year
Depletion Cost
​ LaTeX ​ Go Depletion Cost = Initial Cost*(Amount of Material Used/Original Amount of Material Purchased)

Depreciation by Sum of Year Digit Method Formula

​LaTeX ​Go
Depreciation = (2*(Service Life-Number of Years in Actual Use+1))/(Service Life*(Service Life+1))*(Original Value of Assets at Start of Service-Salvage Value of Asset at End of Service)
da = (2*(n-a+1))/(n*(n+1))*(V-Vs)

What is Salvage Value?

Salvage value, also known as residual value or scrap value, is the estimated residual worth of a tangible asset at the end of its useful life. It represents the anticipated market value, net of any disposal costs, that an asset is expected to have when it is retired or disposed of after completing its economic utility. A higher salvage value results in higher depreciation expenses during the asset's useful life, while a lower salvage value leads to lower depreciation expenses. The salvage value is an estimate and may be influenced by factors such as expected market conditions, technological obsolescence, and the condition of the asset at the end of its useful life.





What is Depreciation?

Depreciation is an accounting method used to allocate the cost of a tangible asset over its estimated useful life. It represents the reduction in the value of the asset over time, reflecting factors such as wear and tear, obsolescence, or the passage of time. The purpose of depreciation is to match the expense of using an asset with the revenue it generates, providing a more accurate representation of an asset's true economic cost throughout its operational life. Depreciation is crucial for financial reporting, tax purposes, and overall asset management. Common methods of calculating depreciation include straight-line depreciation, declining balance, and sum-of-the-years-digits.

How to Calculate Depreciation by Sum of Year Digit Method?

Depreciation by Sum of Year Digit Method calculator uses Depreciation = (2*(Service Life-Number of Years in Actual Use+1))/(Service Life*(Service Life+1))*(Original Value of Assets at Start of Service-Salvage Value of Asset at End of Service) to calculate the Depreciation, Depreciation by Sum of Year Digit Method is an accelerated depreciation technique that allocates a higher depreciation expense in the earlier years of an asset's useful life. Depreciation is denoted by da symbol.

How to calculate Depreciation by Sum of Year Digit Method using this online calculator? To use this online calculator for Depreciation by Sum of Year Digit Method, enter Service Life (n), Number of Years in Actual Use (a), Original Value of Assets at Start of Service (V) & Salvage Value of Asset at End of Service (Vs) and hit the calculate button. Here is how the Depreciation by Sum of Year Digit Method calculation can be explained with given input values -> 6545.455 = (2*(10-3+1))/(10*(10+1))*(50000-5000).

FAQ

What is Depreciation by Sum of Year Digit Method?
Depreciation by Sum of Year Digit Method is an accelerated depreciation technique that allocates a higher depreciation expense in the earlier years of an asset's useful life and is represented as da = (2*(n-a+1))/(n*(n+1))*(V-Vs) or Depreciation = (2*(Service Life-Number of Years in Actual Use+1))/(Service Life*(Service Life+1))*(Original Value of Assets at Start of Service-Salvage Value of Asset at End of Service). Service Life refers to the estimated period during which the asset is expected to provide economic benefits and be used for its intended purpose, Number of Years in Actual Use refers to the period of time during which a particular asset has been actively employed or utilized for its intended purpose in a business or operational context, Original Value of Assets at Start of Service Life Period refers to the initial cost or acquisition cost of a tangible asset when it is first put into service & Salvage Value of Asset at End of Service Life refers to the amount that the asset is expected to be worth when it is retired or disposed of at the conclusion of its useful life.
How to calculate Depreciation by Sum of Year Digit Method?
Depreciation by Sum of Year Digit Method is an accelerated depreciation technique that allocates a higher depreciation expense in the earlier years of an asset's useful life is calculated using Depreciation = (2*(Service Life-Number of Years in Actual Use+1))/(Service Life*(Service Life+1))*(Original Value of Assets at Start of Service-Salvage Value of Asset at End of Service). To calculate Depreciation by Sum of Year Digit Method, you need Service Life (n), Number of Years in Actual Use (a), Original Value of Assets at Start of Service (V) & Salvage Value of Asset at End of Service (Vs). With our tool, you need to enter the respective value for Service Life, Number of Years in Actual Use, Original Value of Assets at Start of Service & Salvage Value of Asset at End of Service and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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