The Sum of the Years Digits (SYD) method is a depreciation method available for book purposes under U.S. Generally Accepted Accounting Principles (GAAP). 

The SYD method is an accelerated depreciation method that yields larger depreciation expense early in the asset’s life; however, it is smaller than the declining balance method of depreciation. 

The formula to calculate SYD and the depreciation expense (DE) is the following:

DE = (Remaining Lifespan / SYD) X (Cost of Asset – Salvage Value)

SYD = (Usefule Life of Asset X (Useful Life of Asset + 1)) / 2

Example of SYD Depreciation Calculation

Company Alpha, a U.S. corporation, is a Florida-based manufacturer. Company Alpha purchased a piece of manufacturing equipment for $75,000 and put it into service on January 1, 2021. The company estimates that the machine will last five years and have a salvage value of $5,000.

The company first calculates its SYD factor using the 5-year life of the asset:

SYD = (5 x (5+1)) / 2
SYD = 15

The SYD factor can also be thought of as adding each numbered year to arrive at a total.
A useful life of 5 years means 1 + 2 + 3 + 4 + 5 = 15

The calculation for depreciation expense in year 1 is the following:

DE = (5 / 15) X ($75,000 – $5,000)
DE = $23,333

The remaining years are as follows:

  • Year 1: $23,333.33
  • Year 2: $18,666.67
  • Year 3: $14,000
  • Year 4: $9,333.33
  • Year 5: $4,666.67

After totaling the depreciation expense for all five years, we arrive at $70,000 of total depreciation expense, which is the asset cost minus its salvage value.

Other available U.S. GAAP depreciation methods include the following: