Basic Instructions on How to Create a Sum-of-the-Years’-Digits

Depreciation Schedule

1 Love Thy Pet Inc.,

2 Depreciation Schedule - Sum-of-the-Years'-Digits
3 For 5 years Asset
4 Cost of Asset 20,000
5 Residual Value 5,000
6 Useful Life 5 years
B F
Cost of D E Book value at end
A Asset - C Depreciation Accumulated of year (Cost -
End of Residual Fraction expense for depreciation at Accumulated
7 year Value for year year end of year depreciation)
8 1 $15,000 5/15 $5,000 $5,000 $15,000
9 2 $15,000 4/15 $4,000 $9,000 $11,000
10 3 $15,000 3/15 $3,000 $12,000 $8,000
11 4 $15,000 2/15 $2,000 $14,000 $6,000
12 5 $15,000 1/15 $1,000 $15,000 $5,000

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 Step-by-Step Instructions

Always start with the name of the company, the title of the statement, and the period for
which the statement is being prepared.

Step 1. On line 4 place the title “Cost of Asset” and the amount of the asset when purchased.

Step 2. On line 5 place the title “Residual Value” and the amount of the residual value or the
value of the asset once it has ended it useful life to the company.

Step 3.On line 6 place the title “Useful life” and the number of year the asset will be useful to
the company.

Step 4.On line 7 place the titles:

F
B Book value at
Cost of D E end of year
A Asset - C Depreciation Accumulated (Cost -
End of Residual Fraction expense for depreciation at Accumulated
year Value for year year end of year depreciation)

Step 5. On line 8 column A through line 12 column A place the years the asset will be used or
number the lines for the beginning to the end of the assets number of years of useful life.

Step 6. On line 8 column B through line 12 column B place the Depreciable Cost.

Cost of Asset – Residual Value = Depreciable Cost

Step 7. On line 8 column C through line 12 column C place the Fraction for the year.
The formula to calculate the faction is:

N(N+1)
2

5(5+1)
2

= 15

The fractions would be: 5/15, 4/15, 3/15, 2/15, and 1/15

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 Step 8. On line 8 column D through line 12 column D place the Annual Depreciation.
The formula to calculate the depreciation is:

B8 times C8 equals D8
B9 times C9 equals D9
B10 times C10 equals D10
B11 times C11 equals D11
B12 times C12 equals D12

Step 9. On line 8 column D through line 12 column D place the accumulated depreciation.
Use the following formulas to calculate the amounts:

E8 is equal to D8.
E9 is equal to E8 plus D9.
E10 is equal to E9 plus D10.
E11 is equal to E10 plus D11
E12 is equal to E11 plus D12.

Step 10. On line 8 column E through line 12 column E place the Book value of the asset.
Use the following formulas to calculate the amounts:

F8 is equal to the cost of the asset (line 4) minus the Accumulated depreciation on line E8.
F9 is equal to the cost of the asset (line 4) minus the Accumulated depreciation on line E9.
F10 is equal to the cost of the asset (line 4) minus the Accumulated depreciation on line E10.
F11 is equal to the cost of the asset (line 4) minus the Accumulated depreciation on line E11.
F12 is equal to the cost of the asset (line 4) minus the Accumulated depreciation on line E12.

Note: The number on line 12 column F should be the same as the residual value (line 5).
The number on line 12 column E should be the same as the cost of the asset minus
the residual value (depreciable cost).