What is Sum of Years Digits?
The sum-of-years’ digits (SYD) method is an accelerated depreciation technique that allocates a larger portion of the depreciable cost in the early years of an asset’s useful life. It uses the sum of the digits of the asset’s useful life as the denominator.
How It Works
- Estimate the asset’s useful life in years.
- Compute the sum of the digits — for 5 years, 1+2+3+4+5 = 15.
- Compute the depreciable cost (cost − residual value).
- For each year, multiply the depreciable cost by the remaining life divided by the sum of digits.
- Record the resulting depreciation expense and reduce the carrying amount.
Saudi Context
SYD is rarely used for Saudi tax purposes — ZATCA’s income tax depreciation tables follow a group-based reducing-balance approach. SYD remains a valid IFRS option under IAS 16 if it best reflects the consumption pattern.
Example
Asset cost SAR 100K, residual SAR 10K, life 5 years. Depreciable cost SAR 90K. Year-1 depreciation = 90,000 × 5/15 = SAR 30,000. Year-2 = 90,000 × 4/15 = SAR 24,000.