Work out depreciation (sum of years) instantly with clear inputs, formula shown and shareable results.
Sum-of-the-years'-digits is an accelerated method that allocates the depreciable amount in descending fractions. With a six-year life the denominator is 21, so year one takes 6/21 and year six takes 1/21 — front-loaded, but unlike declining balance it fully depreciates to residual value.
Denominator
Sum of years = Life x (Life + 1) / 2
Year charge
Charge = (Cost - Residual) x (Life - Year + 1) / Sum of years
Because it reaches residual value exactly at the end of life with no switch or truncation, while still front-loading the charge.
It is a recognised accounting method but tax treatment varies; many jurisdictions prescribe their own schedules instead.