Sum-of-years' digits (SYD) is an accelerated depreciation method. It charges more in the early years of an asset's life and less later, by applying a fraction that shrinks each year to a fixed depreciable base. It front-loads depreciation less steeply than double-declining balance, and unlike declining-balance methods it lands exactly on salvage value without caps or a switch to straight-line.
The SYD formula
The numerator is the remaining useful life at the start of the year. The denominator stays the same throughout. Because the fractions add up to 1, the total depreciation always equals cost minus salvage.
Worked example: full schedule
A machine costs $30,000, salvage value $5,000, useful life 5 years. Depreciable base = $25,000; sum of the digits = 15.
| Year | Remaining life | Fraction | Depreciation | Accumulated depreciation | Closing NBV |
|---|---|---|---|---|---|
| 1 | 5 | 5/15 | $8,333.33 | $8,333.33 | $21,666.67 |
| 2 | 4 | 4/15 | $6,666.67 | $15,000.00 | $15,000.00 |
| 3 | 3 | 3/15 | $5,000.00 | $20,000.00 | $10,000.00 |
| 4 | 2 | 2/15 | $3,333.33 | $23,333.33 | $6,666.67 |
| 5 | 1 | 1/15 | $1,666.67 | $25,000.00 | $5,000.00 |
Partial first year
SYD years are asset years, not financial years. If the $30,000 machine goes into service on 1 April in a January–December year, the first financial year gets 9 months of asset year 1:
SYD compared with other methods
| Year | Straight-line | Sum-of-years’ digits | Double-declining balance |
|---|---|---|---|
| 1 | $5,000 | $8,333.33 | $12,000 |
| 2 | $5,000 | $6,666.67 | $7,200 |
| 3 | $5,000 | $5,000.00 | $4,320 |
| 4 | $5,000 | $3,333.33 | $1,480 |
| 5 | $5,000 | $1,666.67 | $0 |
US GAAP lists SYD among acceptable methods. IAS 16 does not name it, but allows any method that reflects the pattern in which the asset's benefits are consumed, so SYD can be used under IFRS when that pattern is front-loaded.
Where SYD fits
- Manufacturing: machinery that is most productive and most valuable in its first few years.
- IT team: network or lab equipment that loses usefulness quickly as newer models arrive.
- Logistics: delivery vehicles whose resale value drops fastest when they are new.
Common mistakes
- Applying the fraction to cost instead of cost minus salvage.
- Changing the denominator each year. It stays at n(n + 1) ÷ 2 throughout.
- Treating asset years as financial years when the asset starts mid-year.
- Picking SYD to reduce reported profit rather than to reflect how the asset is used.
Spreadsheet vs software
Excel has a built-in SYD function: =SYD(cost, salvage, life, period), for example =SYD(30000, 5000, 5, 1) returns 8,333.33. It works per full asset year, so mid-year starts, monthly runs and changes of estimate need extra formulas. The free depreciation schedule generator builds the full year-by-year table for you.
Sum-of-years’ digits in Asetavo
SYD is one of the eight methods in Asetavo depreciation (Business plan), on either the book or the tax profile. Monthly runs use the SYD fraction of the base ÷ 12, are computed as drafts and only change NBV when the book run is posted.
