Depreciation is a method used to allocate the cost of an asset over its useful life. One of the methods used to calculate depreciation is the sum of years digit (SYD) method. SYD is a straightforward method that calculates the depreciation of an asset by assigning a declining percentage of its cost to each year in its useful life.
This article will explain how to calculate depreciation using the SYD formula in a step-by-step format.
Here is a step-by-step guide to calculating depreciation using the SYD formula in a worksheet:
- Understand the arguments of the SYD formula: The SYD formula is =SYD(cost, salvage, life, per). The first argument is the cost of the asset, the second argument is the residual value, the third argument is the life of the asset, and the fourth argument is the period of time. Add them in your sheet.
- Make the references absolute: To ensure that the references in the formula remain constant, make them absolute by adding a “$” sign before the column and row references.
- Apply the formula to all cells: Once the formula is entered in the first cell, apply it to all the cells in the worksheet to get the depreciation values. In our case, the formula becomes =VDB($B$2, $B$3, $B4$4, A7). Press Enter the depreciation value for each year.
This article explains how to calculate depreciation using the SYD formula in a step-by-step format. By following the steps outlined in this article, you will be able to calculate the depreciation of an asset using the SYD formula in a worksheet. The SYD formula is a straightforward method that calculates the depreciation of an asset by dividing the sum.