Sum-of-the-Year-Digits

Dt={y/SYD){C-SV), (3.3)

where Y=the number of year remaining in depreciation, and SYD = the sum of year digits.

Table 3.4 Sum-of-the-year-digits

Year

Depreciation Value Per Year

Book Value at the End of the Year

0

50000

1

40000 X (5/15) = 13333

36700

2

40000 X (4/15) = 10670

26000

3

40000 X (3/15) = 8000

18000

4

40000 X (2/15) = 5330

12600

5

40000 X (1/15) = 2670

10000

32.1.3 Sinking-Fund Method

Dt=(C-SV)xF (3.4)

where F = the factor for many values at 5 years for an interest rate assuming 7%.

First year = (50000-10000)(0.1774) = 7069.

Second year=7096 + 0.06(7096) = 7521.8.

Table 3.5 Sinking-fund method

Year

Depreciation Value Per Year

Book Value at the End of the Year

0

50000

1

7100

42900

2

7520

35380

3

7970

27410

4

8450

18960

5

8960

10000