 # Sum of the years digits depreciation Home  Site Map  Add Term  Search  About Us  Contributors # Sum of the years digits depreciation

Method of accelerated depreciation.

Sum of the years digits depreciation

# Depreciation

Depreciation

The charge in a company's accounts which reflects the reduction in value of an asset over time as its useable life is exhausted.Depreciation is charged before calculation of profit, on the grounds that the use of capital assets is one of the costs of being in business and one of the contributors to profit.There are two main methods of depreciation:Straight line: the residual (scrap) value of the asset is deducted from its original cost, and the resultant figure is divided by the estimated life of the asset. The result of that is deducted annually over the life of the asset. So an asset that costs £10,000 and that has a residual value of £200 with a useable life of 4 years is depreciated by £2450 per year.Reducing balance: the amount of annual depreciation is a constant proportion of the cost of the asset.Depreciation has no effect on cash flow. It is just an accounting procedure.

# Earnings before interest, taxes, depreciation, and amortization (EBITDA)

Earnings before interest, taxes, depreciation, and amortization (EBITDA)

A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes. Depreciation and amortization expenses are not included in the costs.

# Double Declining Balance Method Of Depreciation

Double Declining Balance Method Of Depreciation

A use of the declining balance method, but with double the depreciation allowable by straight line. An accelerated method.

# Book Depreciation

Book Depreciation

Depreciation reserved (on the books) by an owner for future replacement or retirement of an asset.

# Capital depreciation

Capital depreciation

See depreciation.

# Further Suggestions

Double declining balance depreciation
Straight line depreciation
Currency depreciation
Capital appreciation or depreciation
Depreciation
Depreciation
Asset Depreciation Range System
Depreciation tax shield
Currency depreciation
Declining Balance Method Of Depreciation
Earnings before interest, taxes, and depreciation (EBITD)
Double declining balance depreciation method (DDB)
Real appreciation or depreciation
Accrued Depreciation
Recapture Of Depreciation