Sum-of-Years-Digits Method (DIGITS)

digits(cost, salvage_value, useful_life)

Compute the depreciation for an asset using the sum-of-years-digits method.
syse.digits(cost: ndarray, salvage_value: ndarray, useful_life: int) → ndarray

Compute the depreciation for an asset using the sum-of-years-digits method.

Parameters:

  • cost (np.ndarray) – The cost of the asset.

  • salvage_value (np.ndarray) – The salvage value of the asset.

  • useful_life (int) – The useful life of the asset.

Returns:

The depreciation for the asset.

Return type:

np.ndarray

Note

The function takes as input the cost of the asset, the salvage_value of the asset at the end of its useful life, and the useful_life of the asset in years. It computes the depreciation for the asset using the sum-of-years-digits method, which assumes that the asset depreciates more rapidly in the earlier years of its life.

Examples:

Suppose a company purchases a machine for $60,000, with an expected salvage value of $6,000 after 6 years. The company expects to use the machine for 6 years. We can compute the accumulated depreciation for the machine using the digits function:

cost= 60000
salvage_value= 6000
useful_life= 6
syse.digits(cost, salvage_value, useful_life)
Output = 54000

This means that the accumulated depreciation is $54,000 and the book value of the machine will be $6,000, which is the expected salvage value.