To calculate the depreciation expense using the Sum of the Years' Digits (SYD) method, follow these steps:

1. Determine the asset's cost, salvage value, and useful life. In this case, the cost is 5 lac, the salvage value is 1 lac, and the useful life is 20 years.

2. Calculate the sum of the years' digits. This is done by adding together all the digits of the years of the asset's useful life. For a useful life of 20 years, the sum would be 1+2+3+...+20 = 210.

3. Determine the fraction for the first year. This is done by dividing the number of years of useful life remaining at the start of the year by the sum of the years' digits. In the first year, there are 20 years of useful life remaining, so the fraction would be 20/210.

4. Multiply the depreciable cost by the fraction to get the depreciation expense for the first year. The depreciable cost is the cost of the asset minus its salvage value, or 5 lac - 1 lac = 4 lac. So, the depreciation expense for the first year would be 4 lac * (20/210) = 0.38 lac or 38,000 rupees.

Question

To calculate the depreciation expense using the Sum of the Years' Digits (SYD) method, follow these steps:

1. Determine the asset's cost, salvage value, and useful life. In this case, the cost is 5 lac, the salvage value is 1 lac, and the useful life is 20 years.

2. Calculate the sum of the years' digits. This is done by adding together all the digits of the years of the asset's useful life. For a useful life of 20 years, the sum would be 1+2+3+...+20 = 210.

3. Determine the fraction for the first year. This is done by dividing the number of years of useful life remaining at the start of the year by the sum of the years' digits. In the first year, there are 20 years of useful life remaining, so the fraction would be 20/210.

4. Multiply the depreciable cost by the fraction to get the depreciation expense for the first year. The depreciable cost is the cost of the asset minus its salvage value, or 5 lac - 1 lac = 4 lac. So, the depreciation expense for the first year would be 4 lac * (20/210) = 0.38 lac or 38,000 rupees.

Knowee AI · Accepted Answer

To calculate the depreciation expense using the Sum of the Years' Digits (SYD) method, follow these steps:

1. Determine the asset's cost, salvage value, and useful life. In this case, the cost is 5 lac, the salvage value is 1 lac, and the useful life is 20 years.

2. Calculate the sum of the years' digits. This is done by adding together all the digits of the years of the asset's useful life. For a useful life of 20 years, the sum would be 1+2+3+...+20 = 210.

3. Determine the fraction for the first year. This is done by dividing the number of years of useful life remaining at the start of the year by the sum of the years' digits. In the first year, there are 20 years of useful life remaining, so the fraction would be 20/210.

4. Multiply the depreciable cost by the fraction to get the depreciation expense for the first year. The depreciable cost is the cost of the asset minus its salvage value, or 5 lac - 1 lac = 4 lac. So, the depreciation expense for the first year would be 4 lac * (20/210) = 0.38 lac or 38,000 rupees.

A company purchase a building for rupees 5lac with in estimate usefull life of 20 years and a salvage value of rupees 1lac. Using the sum of the year digital method of depreciation expense for the first year?

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