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In Depth Information
Using SYD to Calculate Sum-of-Years’-Digits Depreciation
22. Because both DDB and VDB take the same first three arguments — cost,
salvage, and life — leave those three arguments alone.
33. Change the period number in DDB to the start period and end period for
VDB. Cell C6 specifies A6 as the period number. Change this argument
to A6 – 1,A6. This is a bit strange because you are asking VDB to cal-
culate the depreciation from the end of Year 0 to the end of Year 1.
44. Determine whether the DDB function is done. factor, which is usually
left off the function, is assumed to be 2. If DDB has no fifth argument,
then VDB does not need a fifth argument.
55. To allow VDB to switch to the straight-line method, ensure that the
sixth argument is FALSE. The name of this argument is no_switch. By
specifying FALSE, you are invoking a double negative to ask VDB to
switch to the straight-line method when appropriate. Because FALSE
is the default, you can often leave off the fifth and sixth arguments
later in this chapter.
to Calculate Sum-of-Years ’ -Digits Depreciation
The sum-of-years ’ -digits method is another accelerated depreciation sys-
tem. It ensures that the value of the asset drops more in the earlier years of
the asset ’ s life than in later years.
Suppose you have an asset with a useful life of seven years. You need to
add all the years from seven to one: 7 + 6 + 5 + 4 + 3 + 2 + 1 = 28. In the first
year, you can write off 7 / 28 of the value. In the next year, you can write off
6 / 28. In successive years, you can write off 5 / 28, 4 / 28, 3 / 28, 2 / 28, and 1 /
28, respectively, of the depreciable value.
SYD to Calculate Sum-of-Years ’ -Digits Depreciation
The SYD function returns the sum-of-years ’ -digits depreciation of an as-
set for a specified period. This function takes the following arguments:
cost — This is the initial cost of the asset.
salvage — This is the value at the end of the depreciation period. So-
metimes this is called the salvage valueof the asset.