Depreciation methods for fixed assets
This topic describes the depreciation method set up for legal entities in China.
The sum of the years' digits method of depreciation (SYD) is one of the accelerated depreciation techniques that is based on the assumption that assets are generally more productive when they are new and their productivity decreases as they become old. The formula to calculate depreciation under SYD method is:
SYD Depreciation = Depreciable base × (Remaining useful life/Sum of the years digits)
To create a depreciation profile:
- On the Fixed assets parameters page, select the SYDM and DRBM depreciation methods.
- Create a new depreciation profile. Use the method of either Sum year digits or Double reducing balance.
- Create a book for the depreciation method, use either Sum year digits or Double reducing balance.
For more information, see Set up fixed asset depreciation allocation.