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<ManualTopic ID="/baanerp/tf/onlinemanual/000190" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">To calculate Sum of Year Digits depreciation</Title>
		<Keyword><Level1>Sum of Years Digits (SYD) Calculation</Level1>
		</Keyword>
		<Keyword><Level1>SYD calculation</Level1>
		</Keyword>
	</Header>
	<GeneralSection><Paragraph>In the sum of Years Digits depreciation method, a fraction of an asset's depreciable cost is written off each year. The fraction is formed by a numerator equal to the remaining life of the asset, and a denominator equal to the sum of the number of the years of the asset's life.</Paragraph>
		<Paragraph>SSA ERP considers whether the asset has a life that ends evenly on a year-end boundary when it calculates the sum of years in the life. If the life ends in the middle of a year, SSA ERP uses a decimal amount in the sum of years calculation. For example, if you have an asset with a life of five years, SSA ERP calculates a denominator of fifteen, computed as follows:</Paragraph>
		<Paragraph>(5 + 4 + 3 + 2 + 1) = 15</Paragraph>
		<Paragraph>For an asset with a life of five years and three months, the sum of the years digits is 16.25, computed as follows:</Paragraph>
		<Paragraph>(5.25 + 4.25 + 3.25 + 2.25 + 1.25) = 16.25</Paragraph>
		<Paragraph>SSA ERP uses the resulting fraction to determine the annual depreciation amount. After calculating the annual depreciation expense, SSA ERP then proportionally divides each year's expense across the number of periods for that year.</Paragraph>
		<ExampleSection><SectionTitle>Example</SectionTitle>
			<Paragraph>Years of depreciation = 5</Paragraph>
			<Paragraph>cost = $ 10,000</Paragraph>
			<Paragraph>Depreciation:</Paragraph>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">
year 1:   $ 10,000 * 5 / 15 = $ 3,333.33
year 2:   $ 10,000 * 4 / 15 = $ 2,666.67
year 3:   $ 10,000 * 3 / 15 = $ 2,000.00
year 4:   $ 10,000 * 2 / 15 = $ 1,333.33
year 5:   $ 10,000 * 1 / 15 = $   666.67
Sum:                          $10,000.00
</Paragraph>
			</Formula>
		</ExampleSection>
		<GeneralSection><SectionTitle>Note</SectionTitle>
			<Paragraph>If the asset for which you are calculating depreciation contains an averaging convention, SSA ERP adjusts the depreciation expense for the first half-year, quarter, or month calculation. For more information, refer to <Link href="/baanerp/tf/onlinemanual/000176" role="manual">Calculations and Averaging Conventions</Link>.</Paragraph>
			<List><ListIntro>Sum of Years Digits (SYD) has two variations based on the calculation mode in use for the asset in its related books:</ListIntro>
				<ListItem>SYD daily</ListItem>
				<ListItem>SYD periodic</ListItem>
			</List>
		</GeneralSection>
		<GeneralSection><SectionTitle>SYD daily</SectionTitle>
			<ProcedureList><ListIntro>In the Sum of Years Digits Daily formula, SSA ERP considers the exact number of days in each period when calculating the depreciation expense for each period. SSA ERP performs three steps each time it calculates depreciation:</ListIntro>
				<ListItem>Determines the annual depreciation expense for the current year and the next year.</ListItem>
				<ListItem>Calculates the change per period.</ListItem>
				<ListItem>Calculates the exact depreciation amount for the current period, based on the annual expense and the change value.</ListItem>
			</ProcedureList>
			<Paragraph>The following formulas are used:</Paragraph>
			<List><ListItem>U.S. tax books:</ListItem>
			</List>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">Depreciation = 
    (cost - salvage - Sec179) * (business percentage/100) *
    (remaining years in life / sum of years)
</Paragraph>
			</Formula>
			<List><ListItem>Other books:</ListItem>
			</List>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">Depreciation = (cost - salvage) * (remaining years in life / sum of years)
</Paragraph>
			</Formula>
			<Paragraph>For <Link href="/baanerp/tf/glossary/glossary#000139" role="glossary">MACRS</Link> and <Link href="/baanerp/tf/glossary/glossary#000104" role="glossary">ACRS</Link> the salvage value is not applied to depreciation of U.S. tax and commercial books.</Paragraph>
			<Paragraph>To calculate the current period's depreciation:</Paragraph>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">
[(current year's depreciation / 365) * days in period] + 
[change per period * (x - y - days in the period)]
</Paragraph>
			</Formula>
			<Paragraph>The following applies to the above formula:</Paragraph>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">change per period = (current year's depreciation - next year's depreciation) / 365 / 365
</Paragraph>
			</Formula>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">x = [ ( 184 - days from the start of the year to the start of the current  period) * 
( 185 - days from the start of the year to the start of the current period) ] / 2
</Paragraph>
			</Formula>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">y = [ ( 184 - days from the start of the year to the start of the current period - 
days in the current period) * ( 185 - days from the start of the year to the
start of the current period - days in the current period) ] / 2</Paragraph>
			</Formula>
		</GeneralSection>
		<GeneralSection><SectionTitle>SYD periodic</SectionTitle>
			<ProcedureList><ListIntro>In the Sum of Years Digits Periodic formula, SSA ERP considers the exact number of days in each period when calculating the depreciation expense for each period. SSA ERP performs three steps:</ListIntro>
				<ListItem>Determines the annual depreciation expense for the current year and the next year.</ListItem>
				<ListItem>Calculates the change per period.</ListItem>
				<ListItem>Uses this value to calculate the exact depreciation amount for the current period.</ListItem>
			</ProcedureList>
			<Paragraph>The following formulas are used:</Paragraph>
			<List><ListItem>U.S. tax books:</ListItem>
			</List>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">Depreciation = (cost - salvage - Sec179) * (business percentage / 100) *
(remaining years in life / sum of years)</Paragraph>
			</Formula>
			<List><ListItem>Other books:</ListItem>
			</List>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">Depreciation = (cost - salvage) * (remaining years in life / sum of years)</Paragraph>
			</Formula>
			<Paragraph>For <Link href="/baanerp/tf/glossary/glossary#000139" role="glossary">MACRS</Link> and <Link href="/baanerp/tf/glossary/glossary#000104" role="glossary">ACRS</Link> the salvage value is not applied to depreciation of U.S. tax and commercial books.</Paragraph>
			<List><ListItem>To calculate the current period's depreciation:</ListItem>
			</List>
			<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">
( current year's depreciation / 12) + (change per period * [ (number of
periods + 1) / 2 ] - current period number)
</Paragraph>
			</Formula>
			<Paragraph>The following applies to the above formula:</Paragraph>
			<Paragraph>change per period = (current year's depreciation - next year's depreciation) / 12 / 12</Paragraph>
			<Paragraph>current period number = The position of the current period in the current year of the asset's life. For example, in a fiscal year beginning in January, February is 2.</Paragraph>
		</GeneralSection>
	</GeneralSection>
</ManualTopic>
