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SYD: Calculating depreciation for a specified period

From: Excel 2010: Financial Functions in Depth

Video: SYD: Calculating depreciation for a specified period

There are many acceptable methods for calculating depreciation schedules, some of which are more aggressive than others. The straight-line depreciation method is very conservative and the declining balance method is more aggressive. The sum of years depreciation method is somewhere between the two and in this movie I'll show you how to use the SYD function to calculate the sum of years depreciation value for a given year. The sum of years method is named for the way the number of the year in the asset's used for life is used to calculate the amount of depreciation allowed. The SYD function uses four arguments.

SYD: Calculating depreciation for a specified period

There are many acceptable methods for calculating depreciation schedules, some of which are more aggressive than others. The straight-line depreciation method is very conservative and the declining balance method is more aggressive. The sum of years depreciation method is somewhere between the two and in this movie I'll show you how to use the SYD function to calculate the sum of years depreciation value for a given year. The sum of years method is named for the way the number of the year in the asset's used for life is used to calculate the amount of depreciation allowed. The SYD function uses four arguments.

The first is the initial cost of the asset. The second is its salvage value. That is the amount for which you can sell the asset when it's reached the end of its useful life. Then the number of years of its economic life and in this case that's 30 years, and then finally the period for which you're calculating sum of years depreciation. So let's go ahead and create our function. I click in cell C9, type in equal sign, and then syd for sum of years depreciation, left parentheses and then we can start filling in our arguments.

So the cost is in cell C3, the salvage value in C4, typing a comma, then the life is in cell C5, comma again, and then the number of the period is in cell C6. Type a right parentheses, make sure everything looks right, and I believe it is, then press the Tab key so I don't scroll down. And we can see that the depreciation on this asset in year one is about $20,900. Let's see how that changes throughout the life of the asset. So I'll change the period from 1 to 11, so it's in its 11th year, and then press Enter and the depreciation goes down to about 14,000.

Now I'll change it to 21 so it's in its 21st year of its 30 year economic life and press Enter. depreciation drops by about half and then finally in its last year, which is the 30th year, we see that we get a very small amount of depreciation. The way that you calculate sum of years depreciation is actually fairly interesting, but it's beyond the scope of this movie. If you want to use the sum of years depreciation method you can use the SYD function. You'll only need these four arguments and you can calculate the depreciation values you need.

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This video is part of

Image for Excel 2010: Financial Functions in Depth
Excel 2010: Financial Functions in Depth

52 video lessons · 13181 viewers

Curt Frye
Author

 
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  1. 2m 11s
    1. Welcome
      1m 6s
    2. Using the exercise files
      36s
    3. Disclaimer
      29s
  2. 28m 32s
    1. PMT: Calculating a loan payment
      3m 31s
    2. PPMT and IPMT: Calculating principal and interest per loan payment
      4m 18s
    3. CUMPRINC and CUMIPMT: Calculating cumulative principal and interest paid between periods
      4m 30s
    4. ISPMT: Calculating interest paid during a specific period
      2m 13s
    5. EFFECT and NOMINAL: Finding nominal and effective interest rates
      3m 31s
    6. ACCRINT and ACCRINTM: Calculating accrued interest for investments
      4m 15s
    7. RATE: Discovering the interest rate of an annuity
      2m 41s
    8. NPER: Calculating the number of periods in an investment
      3m 33s
  3. 19m 5s
    1. SLN: Calculating depreciation using the straight-line method
      1m 48s
    2. DB: Calculating depreciation using the declining balance method
      3m 10s
    3. DDB: Calculating depreciation using the double-declining balance method
      3m 20s
    4. SYD: Calculating depreciation for a specified period
      2m 13s
    5. VDB: Calculating declining balance depreciation for a partial period
      3m 24s
    6. AMORDEGRC: Calculating depreciation using a depreciation coefficient
      2m 27s
    7. AMORLINC: Calculating depreciation for each accounting period
      2m 43s
  4. 22m 33s
    1. FV: Calculating the future value of an investment
      2m 48s
    2. FVSCHEDULE: Calculating the future value of an investment with variable returns
      2m 21s
    3. PV: Calculating the present value of an investment
      2m 6s
    4. NPV: Calculating the net present value of an investment
      3m 17s
    5. IRR: Calculating internal rate of return
      2m 33s
    6. XNPV: Calculating net present value given irregular inputs
      2m 32s
    7. XIRR: Calculating internal rate of return for irregular cash flows
      1m 48s
    8. MIRR: Calculating internal rate of return for mixed cash flows
      2m 2s
    9. DISC: Calculating the discount rate of a security
      3m 6s
  5. 24m 12s
    1. COUPDAYBS: Calculating total days between coupon beginning and settlement
      3m 2s
    2. COUPDAYS: Calculating days in the settlement date's coupon period
      2m 48s
    3. COUPDAYSNC: Calculating days from the settlement date to the next coupon date
      3m 1s
    4. COUPNCD: Calculating the next coupon date after the settlement date
      2m 43s
    5. COUPNUM: Calculating the number of coupons between settlement and maturity
      2m 55s
    6. COUPPCD: Calculating the date of a coupon due immediately before settlement
      3m 4s
    7. DURATION: Calculating the annual duration of a security
      3m 20s
    8. MDURATION: Calculating the duration of a security using the modified Macauley method
      3m 19s
  6. 28m 43s
    1. DOLLARDE and DOLLARFR: Converting between fractional prices and decimal prices
      2m 36s
    2. INTRATE: Calculating the interest rate of a fully invested security
      2m 50s
    3. RECEIVED: Calculating the value at maturity of a fully invested security
      2m 46s
    4. PRICE: Calculating the price of a security that pays periodic interest
      3m 19s
    5. PRICEDISC: Calculating the price of a discounted security
      2m 48s
    6. PRICEMAT: Calculating the price of a security that pays interest at maturity
      1m 57s
    7. TBILLEQ: Calculating the bond-equivalent yield for a Treasury bill
      1m 50s
    8. TBILLPRICE: Calculating the price for a Treasury bill
      1m 31s
    9. TBILLYIELD: Calculating the yield of a Treasury bill
      1m 41s
    10. YIELD: Calculating the yield of a security that pays periodic interest
      2m 59s
    11. YIELDDISC: Calculating the annual yield for a discounted security
      2m 9s
    12. YIELDMAT: Calculating the annual yield of a security that pays interest at maturity
      2m 17s
  7. 12m 1s
    1. ODDFPRICE: Calculating the price of a security with an odd first period
      3m 17s
    2. ODDFYIELD: Calculating the yield of a security with an odd first period
      3m 3s
    3. ODDLPRICE: Calculating the price of a security with an odd last period
      2m 44s
    4. ODDLYIELD: Calculating the yield of a security with an odd last period
      2m 57s
  8. 1m 5s
    1. Additional resources
      1m 5s

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