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→Sum-Of-The-Years-Digits Depreciation: Spelling, Grammar, and flow, typos fixed: five year → five-year
Under the sum-of-the-years-digits method, the calculation is determined based on the number of years. An easy formula to use in determining the denominator is (n<sup>2</sup>+n)/2 where n is equal to the useful life of the asset in years. The numerator is the number of remaining years (including that year). The fraction is applied to the original historical cost less residual value.
Under the sum-of-the-years-digits method, the calculation is determined based on the number of years. An easy formula to use in determining the denominator is (n<sup>2</sup>+n)/2 where n is equal to the useful life of the asset in years. The numerator is the number of remaining years (including that year). The fraction is applied to the original historical cost less residual value.
In the example above, a five year life would result in the denominator being 15 [(5<sup>2</sup>+5)/2 = 15]. In the first year the fraction is 5/15, then 4/15, 3/15, 2/15, and finally 1/15. The table below shows the calculation (amounts are rounded to the nearest whole dollar).
In the example above, a five-year life would result in the denominator being 15 [(5<sup>2</sup>+5)/2 = 15]. In the first year the fraction is 5/15, then 4/15, 3/15, 2/15, and finally 1/15. The table below shows the calculation (amounts are rounded to the nearest whole dollar).
{| class="wikitable"
{| class="wikitable"