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

1234 20,0005 5,0006 5 years

7

A End of year

B Cost of Asset -

Residual Value

C Fraction for year

D Depreciation expense for

year

E Accumulated

depreciation at end of year

F Book value at end

of year (Cost - Accumulated depreciation)

8 1 $15,000 5/15 $5,000 $5,000 $15,0009 2 $15,000 4/15 $4,000 $9,000 $11,000

10 3 $15,000 3/15 $3,000 $12,000 $8,00011 4 $15,000 2/15 $2,000 $14,000 $6,00012 5 $15,000 1/15 $1,000 $15,000 $5,000

Residual ValueUseful Life

Love Thy Pet Inc.,Depreciation Schedule - Sum-of-the-Years'-Digits

For 5 years AssetCost of Asset

1

2

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:

A End of year

B Cost of Asset -

Residual Value

C Fraction for year

D Depreciation expense for

year

E Accumulated

depreciation at end of year

F Book value at end of year

(Cost - Accumulated 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

3

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).

4