Content of PetroWiki is intended for personal use only and to supplement, not replace, engineering judgment. SPE disclaims any and all liability for your use of such content. More information
Glossary:Depreciation, sum of the years
One of the liberalized methods of computing depreciation, normally used for tax purposes. Under this method, the annual deduction is derived by multiplying the cost of the property less estimated net salvage, by the estimated number of years of service life remaining, and dividing the resultant product by the sum of all the digits would be 25+24+23+22+ etc. +5+4+3+2+1 or 325. A simple way to compute this figure would be to multiply the number of years by the number of years plus one and divide by 2, i.e., (25 X 26)/2 = 325. The first year's full depreciation deduction would be 25/325ths, the second year's would be 24/325ths, etc., of the cost of the property (From AGA).