Sum of the Years' Digits

Why use this method?
Sum of the years' digits (SYD) is a method of accelerated depreciation (the process of deducting the purchase price of a fixed asset over several accounting periods). Accelerated methods assume a fixed asset (property used in a productive capacity which will benefit the enterprise for longer than one year) loses a greater proportion of its value in the early years of use. Consequently, the amount of depreciation expense is higher at the beginning of the useful life, and declines over time.

Some kinds of property - cars, for instance - are more efficiently productive in the initial years of use. Over time, they become more costly to maintain. Rising maintenance and repair costs tend to offset the lower depreciation expense in later years. Property with this characteristic makes a good candidate for an accelerated method.

SYD depreciates more in the early years than straight-line does, but it's not as accelerated as the double-declining balance method.

How does it work? 

Depreciation expense = cost less salvage value X applicable fraction applicable fraction = years of estimated useful life remaining as of fiscal year start SYD SYD = n(n+1) 2 where n = estimated useful life