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What is Sum of Years Digit?
13. What is Sum of Years Digit?
- The amount of depreciation each year is fixed and equal.
- Way to work out the loss of value of an asset over time.
- System of recording larger depreciation expenses during the earlier years.
- An accelerated method for calculating an asset's depreciation.
Answer: D) An accelerated method for calculating an asset's depreciation.
Explanation:
Sum of the years' digits (SYD) is a sped-up technique for ascertaining a resource's devaluation. This technique takes the resource's normal life and includes the digits for every year; so, on the off chance that the resource was supposed to keep going for a very long time, the number of the years' digits would be gotten by adding: 5 + 4 + 3 + 2 + 1 to get an aggregate of 15. Every digit is then isolated by this aggregate to decide the rate by which the resource ought to be devalued every year, beginning with the largest number in year 1.