The Excel SYD function has the syntax shown below.
SYD(Cost, Salvage, Life, Per)
SYD = Sum of the years digits depreciation
Cost = Cost of the asset
Salvage = Salvage value of the asset at the end of its useful life
Life = Number of periods in the useful life of the asset
Per = The period for which the depreciation expense is required
Use of the Excel SYD Function
The Excel SYD function is used to calculate the sum of the years digits depreciation for a given period.
Excel SYD Function and Annual Depreciation
To illustrate suppose a business purchases an asset for 9,000 and estimates it has a salvage value of 1,000 at the end of its 4 year useful life. Calculate the sum of the years digits depreciation for year 3.
The sum of the years digits depreciation for year 3 is given by the SYD function as follows:
Cost = 9,000 Salvage = 1,000 Life = 4 years Per = 3 SYD Depreciation = SYD(Cost, Salvage, Life, Per) SYD Depreciation = SYD(9000, 1000, 4, 3) SYD Depreciation = 1,600
As can be seen the sum of years digits depreciation for year 3 is calculated as 1,600.
SYD Formula and Monthly Depreciation
In the above example the depreciation was calculated on an annual basis and the period was defined in terms of years. However, the Excel SYD formula can be used with any period simply by defining the length of the period. For example, if the life of the asset above was defined as 48 months instead of 4 years, then the SYD depreciation for month 11 can be calculated as follows:
Cost = 9,000 Salvage = 1,000 Life = 48 months Per = 11 SYD Depreciation = SYD(Cost, Salvage, Life, Per) SYD Depreciation = SYD(9000, 1000, 48, 11) SYD Depreciation = 258.50
As can be seen the sum of years digits depreciation for month 11 is calculated as 258.50.
Depreciation calculated using the SYD function is higher in the earlier periods than in the later periods of the assets useful life, and for this reason is known as an accelerated depreciation method.
The Excel SYD function is one of many Excel financial functions used in accounting calculations, discover another at the links below.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.