Sum-of-the-years'-digits depreciation

The method first fixes one depreciable amount. It then builds a denominator by adding the period numbers in the useful life. The numerator starts with the remaining life and falls by one in each later period.

Sum-of-the-years' digits applies a changing fraction to a fixed amount. Declining balance instead uses one rate with a falling carrying amount. Both accelerate cost, but only the years'-digits method subtracts salvage before applying its annual fraction.

Compared with straight-line, the method moves more expense into early periods. A reviewer should seek evidence of greater early service instead of accepting a preference for the resulting income pattern.

Build the full fraction schedule

For an (n)-period life, the denominator is (n(n+1)/2). Apply the remaining-life fractions from (n) down to 1 to one fixed depreciable amount. Confirm that the fractions sum to one and that lifetime depreciation equals cost less supported salvage value.

ASC 360-10-35-4 requires systematic and rational allocation. It does not name the years'-digits method or establish that an accelerated pattern fits a particular asset. Operational evidence must support greater early consumption.

Compare the method with the checked straight-line, activity, and declining-balance amounts in the Linden Peak example.

Control partial periods and the endpoint

Define whether the policy applies the annual fraction before or after a partial-period convention. Use that policy consistently from the readiness date. A midyear start does not permit the numerator sequence to skip a fraction or allocate more than the fixed depreciable amount.

At each reporting date, reconcile opening carrying amount, current expense, accumulated depreciation, and ending carrying amount. At the end of the supported life, cumulative expense must equal cost less salvage value. The method changes timing and does not create a different lifetime total.

Years'-digits depreciation is a book allocation pattern. It does not establish a tax deduction, current market value, impairment, or physical condition.