Essential Mathematical Formulas for PMP Certification Test
A = B + C
Example
Assume you purchased a machine for your project that is intended to last 5 years. The SYD approach works by adding the digits for each year of the asset’s life:
For a five-year useful life:SYD = 5 + 4 + 3 + 2 + 1 + 1 = 15
The calculation for SYD depreciation for a certain year is as follows: [Depreciation Expense for Year X = Remaining Useful Life at the Beginning of Year X SYD multiplied by Cost of Asset]
Assume it’s the end of the second year and you want to compute depreciation using the SYD method:
– Year 2’s remaining usable life = 5 years – 2 years = 3 years
– The gizmo costs $10,000.
Year 2 Depreciation Expense = frac315 times $10,000 = $2,000 ]
So, using the SYD technique, the machine’s depreciation expenditure for the second year would be $2,000. This method allocates higher depreciation expenditure to the early years of an asset’s life, reflecting the assumption that assets typically lose more value in the early years.
