Depreciation (Sum of the Years)

1. An asset is purchased for P90000. Its estimated life is 10 years, after

which it will be sold for P1000.00. Find the book value during the third
year if the sum-of-the-years digit depreciation is used.
a. P610
0
e.

b. P450
0

d. P480
0

Solution:

f.
SYD = 1 + 2 + 3 + 4 +
5 6 + 7 + 8 + 9 + 10
g.

c. P507
2

j.
Dep 1 = ( 9000-1000 )

SYD = 55

h.
Dep1 = ( 9000-1000 )

( 1055 )= P 1454.5 4

Dep1 = ( 9000-1000 )

( 955 )= P 1309.10

( 855 )= P 1163.6 3

k. Total for 3 years =

P3927.28
l. BV3= 9000 - 3927.28
m. BV3= P5072.72.

i.

2. A telephone company purchased a microwave radio equipment for P6M.

Freight and installment charges amounted to 3% of the purchased price. If
the equipment shall be depreciated over a period of 8 years with a
salvage value of 5%. Determine the depreciation charge during the 5th
year using the sum of the years method.
a. P756632.
78
e.

b. P957902.
56

SYD = 36

h.
FC= 6000000 + 0.03 (6000000)
i.

d. P845935.
76

Solution:

f.
SYD = 1 + 2 + 3 + 4 +
56+7+8
g.

c. P652333.
33

FC= 6180000

j.
SV= 0.5 (6180000) = 309000
k.
Ye
m.
1
o.
2

l.
F
n.
8
p.
7

r.
6

q.
3

t.
5

s.
4

v.
4

u.
5

w.
Depreciation Charge on
the 5th year
x.

Dep = ( FC-SV )

(364 )

y.
Dep= ( 6180000 - 309000 )

( 436 )

z. Dep= P652333.33.
3. An industrial plant bought a generator set for 90,000. Other expenses
including installation amounted to 10,000. The generator set is to have a
life of 17 years with a salvage value at the end of life of 5,000. Determine
the depreciation charge during the 13th year and the book value at the
end of 13 years by the SYD method.
a. P11200
aa.

b. P20100

c. P15000

d. P29100

Solution:

ab. SYD = 1 + 2 + 3 + 4 +
5 + 6 + 7 + 8 + 9 + 10 + 11
+ 12 + 13 +14 +15 +16 +17

ag. Depreciation Charge on

the 13th year

ac.

ah.

SYD = 153

ad.

FC= 90000 + 10000

ae.

FC= 100000

af.

SV= 5000

Dep = ( FC-SV )

(5153 )

ai.
Dep = (100000 - 5 000 )
aj.

(5153 )

Dep = 3,104.58

ak.

am.

Dep = ( 100000 - 5000 )

al.

( 17153+ 16 + ... +

Dep = 88,790.85

6+ 5

BV = FC Dep

BV = 100000 ) an.
88,790.85
ao.

Dep = P11,209.15.

4. A consortium of international communications companies contracted for

the purchase and installation of a fiber optic cable linking two major Asian
cities at a total cost of P960 million. This amount includes freight and
installation charges at 10% of the above total contract price. If the cable
depreciated over a period of 15 years with zero salvage value, what is the
depreciation charge during the eighth year using the sum of the years
digits method?
a. P64 M
b. P23 M
c. P80 M
d. P76 M
ap.

Solution:

aq. SYD = 120

FC= 960 M
ar.

Dep = ( FC-SV )

au.

Dep= ( 960M - 0 )

av.

Dep= P64 M.

SV= 0

as.
Depreciation Charge on
the 8th year

( 8120 )

at.

(8120 )

5. A machine costs P80000 and has an estimated salvage value of P20000 at

the end of 20 years useful life. Compute the book value of the machine
after two years using sum of the years digit method.
a. P68857.1
b. P76346.1
c. P54821.6
d. P74216.3
4
2
2
4
aw.

Solution:

ax.

SYD = 210

ay.

F C= 8 0000

az.

SV= 20000

ba. Depreciation Charge on

the 2nd year

bb.
Dep = ( 80000-20000 )

(20+19
210 )

bc.

Dep = 11142.86

bd.

BV = 80000 - 11142.86

be.

Dep= P68857.14.

6. The first cost of a certain machine is P90000 after 8 years it will have a
salvage value of P18000. Compute the book value at the end of 3 years
by using the sum of the years digit method.

a. P48000
bf.

Solution:

bg.

SYD = 36

bh.

FC= 90000

bi.

SV= 18 000

b. P65000

c. P50500

bk.

d. P30900

Dep = ( FC-SV )

( 8+7+6
)
36

bl.
Dep= ( 90000 - 18 000 )

bj.
Depreciation Charge
after 3rd year

bm.
bn.
bo.

(2136 )

Dep = 42000
BV = 90000-42000
Dep= P48000.

7. An equipment for a road construction was bought 3 years ago for P15000.
The expected life of the equipment is 5 years. What is the book value of
the equipment now using the sum of the years method?
a. P3000
b. P2500
c. P2000
d. P3500
bp.

Solution:

bq.

SYD = 15

br.

FC= 15000

bs.

SV= 0

bu.

Dep= ( 15000 - 0 )

bw.

Dep = P12 000

bx. BV = FC Dep = 15000

- 12000

bt.
Depreciation Charge
after 5th year
5 +4 +3
Dep = ( FC-SV )
15

( 1236 )

bv.

by.

Dep= P3000.

8. A company purchased a microwave radio equipment for P6 million, freight

and installation charges amounted to 4% of the purchased price. If the
equipment will be depreciated over a period of 10 years with a salvage
value of 8%, determine the depreciation cost during the 5th year using
SYD.
a. P656632.
b. P657902.
c. P626269.
d. P627989.
78
56
10
90
bz.

Solution:

ca.

SYD = 55

cb.
FC= 6000000 + 0.04 (6000000)

FC= 624 0000

cc.

cm.
4

cd.
SV= 0.08 (624 0000) = 499200
ce.
Ye
cg.
1
ci.
2
ck.
3

cf.
F

co.
5

cp.
6

cq.
Depreciation Charge on
the 5th year

ch.
1

cr.

cj.
9

cs.

cl.
8

cn.
7

Dep = ( FC-SV )

( 455 )

Dep= ( 624 0000 - 499200 )

(655 )

ct. Dep= P626269.10.

9. An equipment for a baking was bought 5 years ago for P95000. The
expected life of the equipment is 6 years. What is the depreciation charge
of the equipment now using the sum of the years method?
a. P80768.1
b. P957902.
c. P94333.3
d. P90476.1
2
56
3
9
cu.

Solution:

cv.
SYD = 1 + 2 + 3 + 4 +
5+6
cw.

3
dh.
4

SYD = 21
FC= 95 000

cx.

dj.
5

SV= 0

cy.
cz.
Ye
db.
1
dd.
2
df.

4
di.
3
dk.
2

da.
F

dl.
Depreciation Charge on
the 5th year

dc.
6

dm.

Dep = ( FC-SV )

de.
5

dn.

Dep= ( 95000 )

dg.

do.

( 2021 )

(2021 )

Dep= P90476.19.

10. An equipment cost P7000 has a life of 8 years and salvage value of x
after 8 years. If the book value of the equipment at the fourth year is
equal to P2197.22, compute the salvage value x using the sum of the
years method.
a. 594
b. 430
c. 350
d. 293
dp.

Solution:

dq. SYD = 1 + 2 + 3 + 4 +
5+6+7+8
dr.

SYD = 36

ds.

BV = FC - dep

dt.

2197.22= 7000 - dep

du.

dep = 4802.78

dv.
Depreciation Charge on
the 4th year

( 2636 )

dw.

Dep = ( FC-SV )

dx.

4802.78 = ( 7000 - X )

dy.

SV= 350.

(436 )

dz.