SL/ DDB/ SYD methods in depreciation

Source: http://cfa.minute-class.com In this movie clip, we used Excel Spreadsheet to show how to evaluate 3 types of depreciation (SL, DDB, and SYD) step by step. It may seem to be obvious. But really mastering the steps is the key to score full points in the related questions.




Straight line = (cost -- salvage value) / useful life
Double Declining balance (DDB) = (cost -- accumulated depreciation) / useful life x 2
Sum of Year Digit (SYD) = (cost -- salvage value) * depreciable years / sum of year digits




Please note that for SYD, it just reach the salvage value at the end of the useful life as in SL method, while DDB may reach earlier.




In this example, the cost is $3200, salvage value is $500 and useful life is 4 years.

Category:

Howto & Style

Tags:

• CFA
• depreciation

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