Syntax. SYD(Cost,Salvage,Life,Per)
Definition. This function determines the depreciation amounts of an asset according to the arithmetic-degressive method (also called the digital method).
Arguments
Cost (required) The purchase cost (net purchase price plus incidental purchase expenses minus reduction of purchase cost) of an asset. If you don’t use a number, the
#VALUE!error is displayed. If the entered number is negative, the calculated values cannot be interpreted.Salvage (required) Returns the value of the asset at the end of the depreciation duration. If you don’t use a number, the
#VALUE!error is displayed. If the entered number is negative, the#NUMBER!error is displayed.Life (required) The number of periods in which the asset is depreciated. You should use an integer greater than zero for this argument.
Per (required) Specifies the period within the depreciation duration for which the depreciation amount should be calculated. You should use an integer greater than zero for this argument.
Background. Depreciation is used to determine the loss of value of an asset and make that loss visible. It should not be confused with depreciation because of abrasion/use, which refers to the cost of purchasing an asset as part of operation expenses from a tax point of view.
Arithmetic-degressive depreciation is based on a constant reduction of the depreciation amount from period to period. The first depreciation amount is determined with the following formula:
The constant amount that reduces the individual depreciation amounts is calculated by dividing the first depreciation amount by the total number of depreciation periods.
Important
The arithmetic-degressive depreciation method is not allowed within the tax laws of many countries.
Example. An asset with a purchase cost of $1,000.00 should be depreciated in five years to a residual value of $0 by using the arithmetic-degressive method. You can calculate the depreciation amount in each period by using SYD() and subtract it from the book value of the previous period.
Alternatively, you can create a depreciation plan that implements the formulas mentioned earlier in this section for calculating the first depreciation amount as well as the processes for calculating the other amounts. Creating a depreciation plan following your own pattern is especially recommended if you are using methods that are allowed for taxes, because the integrated functions are not usable in general.