Sum of Years Digit Example

Sum of Years Digit allows you to set up an accelerated depreciation method to use when the asset is more productive when it is new.

In other words, the depreciation is greater in the earlier years of the asset's useful life and less in the later years. However, the total amount of depreciation over the asset's useful life does not change.

This method uses the following calculation for depreciation:

Depreciable base x (Remaining useful life / Sum of years digits)

For example, a piece of radiology equipment cost $160,000, the useful life is 5 years, and the expected valued at the end is $10,000. Because the equipment will be sold at the end of five years for $10,000, the total depreciable cost is $150,000.

The digits of the years are summed. 1 + 2 + 3 + 4 + 5 = 15. The sum of the years is then used in the calculation as follows:

Year	Depreciation Amount per Year
1	5/15 of $150,000 = $50,000
2	4/15 of $150,000 = $40,000
3	3/15 of $150,000 = $30,000
4	2/15 of $150,000 = $20,000
5	1/15 of $150,000 = $10,000
Sum	$150,000

Vision uses the following information to calculate Sum of Years Digits depreciation:

Description	Location
Depreciation Basis	Info Center > Equipment > GL Cost Tab
In Service Period	Configuration > Asset Management > Methods Tab
In Service Date	Info Center > Equipment > GL Book Tab
Yearly Depreciation Amount	Multiply the % per year times the Depreciation Basis. The % per year is derived from the Configuration > Asset Management > Methods Tab.
Current Period Cumulative Depreciation	Comes from the assigned asset class (default) or the edited value on the Info Center > Equipment > Depreciation Tab
Calculate the Period Depreciation	Current cumulative depreciation minus the previous cumulative depreciation
Copy Accumulated Depreciation	Copy the current accumulated depreciation to the previous accumulated depreciation.

Vision sets up Sum of Year Digits depreciation by completing the following steps:

Step	Description
1	Pull the depreciation basis from the Cost tab of the Equipment Info Center.
2	Enter the in service date.
3	Count the in service periods.
4	Calculate the yearly depreciation amount.
5	Calculate the period cumulative depreciation.
6	Copy the current accumulated depreciation amount to the previous accumulated depreciation amount.
7	Add this amount to the Depreciation tab of the Equipment Info Center.