When calculating the depreciation of an asset, it is common to use an accelerated depreciation calculation, in which the calculated value of an asset is reduced by a larger amount during the first period of its lifetime, and smaller amounts during subsequent periods.
One popular accelerated depreciation method is the sum-of-years' digits depreciation method, which calculates depreciation using the following equation:
The Excel SYD function calculates the sum-of-years' digits depreciation for a specified period in the lifetime of an asset.
The syntax of the function is:
where the function arguments are as follows:
|cost||-||The initial cost of the asset.|
|salvage||-||The value of the asset at the end of the depreciation.|
|life||-||The number of periods over which the asset is to be depreciated.|
|per||-||The period number for which you want to calculate the depreciation.|
In the example below, the SYD function uses the sum-of-years' digits depreciation method to calculate the yearly depreciation of an asset that costs $10,000 at the start of year 1, and has a salvage value of $1,000 after 5 years.
As expected, subtracting the five yearly depreciation figures from the initial cost of $10,000 gives the required salvage value of $1,000.
Further examples of the Excel SYD function are provided on the Microsoft Office website.
If you get an error from the Excel SYD Function, this is likely to be one of the following:
|#VALUE!||-||Occurs if any of the supplied values are non-numeric.|