Sum of the digits - Revision history

imported>Doug Williamson: Classify page.

2022-02-03T08:29:15Z

Classify page.

← Older revision		Revision as of 08:29, 3 February 2022
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	* [[Reducing balance]]		* [[Reducing balance]]
	* [[Straight line]]		* [[Straight line]]

			[[Category:Accounting,_tax_and_regulation]]
			[[Category:The_business_context]]
			[[Category:Corporate_finance]]
			[[Category:Investment]]
			[[Category:Long_term_funding]]
			[[Category:Financial_products_and_markets]]
			[[Category:Trade_finance]]

imported>Doug Williamson: Update links.

2022-01-29T17:27:24Z

Update links.

← Older revision		Revision as of 17:27, 29 January 2022
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	2.		2.

	Sum of the digits methods are sometimes used to allocate total finance charges - for example under ~~IAS 17~~ - as a simpler alternative to the Implied rate of interest (or Actuarial) method.		Sum of the digits methods are sometimes used to allocate total finance charges - for example under IFRS 16 - as a simpler alternative to the Implied rate of interest (or Actuarial) method.


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	* [[Actuarial method]]		* [[Actuarial method]]
	* [[Depreciation]]		* [[Depreciation]]
	* [[~~IAS 17~~]]		* [[IFRS 16]]
	* [[Implied rate of interest]]		* [[Implied rate of interest]]
			* [[Interest]]
	* [[Reducing balance]]		* [[Reducing balance]]
	* [[Straight line]]		* [[Straight line]]

imported>Doug Williamson: Improve calculations.

2016-01-15T19:37:06Z

Improve calculations.

← Older revision		Revision as of 19:37, 15 January 2016
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	Year 1:		Year 1:

	= 4 / 10 ~~x $10m~~		= $10m x 4 / 10

	= $4m.		= $4m.
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	Year 2:		Year 2:

	= 3 / 10 ~~x $10m~~		= $10m x 3 / 10

	= $3m.		= $3m.
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	Year 3:		Year 3:

	= 2 / ~~1 0 x $10m~~		= $10m x 2 / 10

	= $2m.		= $2m.
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	Year 4:		Year 4:

	= 1 / 10 ~~x $10m~~		= $10m x 1 / 10

	= $1m.		= $1m.

imported>Doug Williamson: Standardise appearance of page

2015-03-18T14:21:00Z

Standardise appearance of page

← Older revision		Revision as of 14:21, 18 March 2015
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	~~For example,~~		'''Example'''

	:a fixed asset has a cost of $12m		A fixed asset has a cost of $12m,

	:an expected disposal value of $2m		an expected disposal value of $2m,

	:and an expected useful life of 4 years.		and an expected useful life of 4 years.

	The total expected accounting cost for the 4 year period
			The total expected accounting cost for the 4 year period:

	= $12m - $2m		= $12m - $2m
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	The allocation proportions (for the total depreciation charges of $10m) are calculated as follows:		The allocation proportions (for the total depreciation charges of $10m) are calculated as follows:

	Year 1: 4/10 (x $10m = $4m).		Year 1:

			= 4 / 10 x $10m

			= $4m.


			Year 2:

			= 3 / 10 x $10m

			= $3m.


			Year 3:

			= 2 / 1 0 x $10m

			= $2m.


	Year 2: ~~3/10 (x $10m = $3m).~~		Year 4:

	~~Year 3: 2~~/10 (x $10m ~~= $2m).~~		= 1 / 10 x $10m

	~~Year 4: 1/10 (x $10m~~ = $1m).		= $1m.


	The net book value of the fixed asset - applying the depreciation charges calculated above - would be (at the end of each year):		The net book value of the fixed asset - applying the depreciation charges calculated above - would be (at the end of each year):

	Year 1 = 12 - 4 = $8m.		Year 1:

			= 12 - 4

			= $8m.


			Year 2:

			= 8 - 3

			= $5m.


			Year 3:

			= 5 - 2

			= $3m.


			Year 4:

	~~Year 2~~ = 8 - ~~3 = $5m.~~		= 3 - 1

	~~Year 3 = 5 - 2~~ = $3m.		= $2m.

	~~Year 4 = 3 - 1 = $2m.~~

imported>Doug Williamson: Make branding consistent

2014-11-26T15:34:39Z

Make branding consistent

@@ Line 7: / Line 7: @@
 In other words, a systematically greater proportion of the total cost or income is allocated to the earlier periods.
-The total expected accounting cost for the 4 year period = $12m - $2m = $10m.
+For example,
 The allocation proportions (for the total depreciation charges of $10m) are calculated as follows:
@@ Line 22: / Line 39: @@
 Year 4: 1/10 (x $10m = $1m).
 The net book value of the fixed asset - applying the depreciation charges calculated above - would be (at the end of each year):

imported>Doug Williamson: Spacing 20/8/13

2013-08-20T08:22:09Z

Spacing 20/8/13

← Older revision		Revision as of 08:22, 20 August 2013
Line 1:		Line 1:
	(SOD).		(SOD).

	1.		1.

	A basis of allocating total costs or income across successive time periods, so as to 'front-end load' them.		A basis of allocating total costs or income across successive time periods, so as to 'front-end load' them.

	In other words, a systematically greater proportion of the total cost or income is allocated to the earlier periods.		In other words, a systematically greater proportion of the total cost or income is allocated to the earlier periods.

	For example, a fixed asset has a cost of $12m, an expected disposal value of $2m and an expected useful life of 4 years.		For example, a fixed asset has a cost of $12m, an expected disposal value of $2m and an expected useful life of 4 years.

	The total expected accounting cost for the 4 year period = $12m - $2m = $10m.		The total expected accounting cost for the 4 year period = $12m - $2m = $10m.

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	Year 1: 4/10 (x $10m = $4m).		Year 1: 4/10 (x $10m = $4m).

	Year 2: 3/10 (x $10m = $3m).		Year 2: 3/10 (x $10m = $3m).

	Year 3: 2/10 (x $10m = $2m).		Year 3: 2/10 (x $10m = $2m).

	Year 4: 1/10 (x $10m = $1m).		Year 4: 1/10 (x $10m = $1m).

	The net book value of the fixed asset - applying the depreciation charges calculated above - would be (at the end of each year):		The net book value of the fixed asset - applying the depreciation charges calculated above - would be (at the end of each year):

	Year 1 = 12 - 4 = $8m.		Year 1 = 12 - 4 = $8m.

	Year 2 = 8 - 3 = $5m.		Year 2 = 8 - 3 = $5m.

	Year 3 = 5 - 2 = $3m.		Year 3 = 5 - 2 = $3m.

	Year 4 = 3 - 1 = $2m.		Year 4 = 3 - 1 = $2m.


	2.		2.

	Sum of the digits methods are sometimes used to allocate total finance charges - for example under IAS 17 - as a simpler alternative to the Implied rate of interest (or Actuarial) method.		Sum of the digits methods are sometimes used to allocate total finance charges - for example under IAS 17 - as a simpler alternative to the Implied rate of interest (or Actuarial) method.


	== See also ==		== See also ==
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	* [[Reducing balance]]		* [[Reducing balance]]
	* [[Straight line]]		* [[Straight line]]

imported>Administrator: CSV import

2012-10-23T14:20:48Z

CSV import

New page

(SOD).
1.
A basis of allocating total costs or income across successive time periods, so as to 'front-end load' them.
In other words, a systematically greater proportion of the total cost or income is allocated to the earlier periods.

For example, a fixed asset has a cost of $12m, an expected disposal value of $2m and an expected useful life of 4 years.
The total expected accounting cost for the 4 year period = $12m - $2m = $10m.

The 'sum of the digits' of the expected holding Years 1 to 4 inclusive = 1 + 2 + 3 + 4 = 10.

The allocation proportions (for the total depreciation charges of $10m) are calculated as follows:

Year 1: 4/10 (x $10m = $4m).
Year 2: 3/10 (x $10m = $3m).
Year 3: 2/10 (x $10m = $2m).
Year 4: 1/10 (x $10m = $1m).

The net book value of the fixed asset - applying the depreciation charges calculated above - would be (at the end of each year):
Year 1 = 12 - 4 = $8m.
Year 2 = 8 - 3 = $5m.
Year 3 = 5 - 2 = $3m.
Year 4 = 3 - 1 = $2m.

2.
Sum of the digits methods are sometimes used to allocate total finance charges - for example under IAS 17 - as a simpler alternative to the Implied rate of interest (or Actuarial) method.

== See also ==
* [[Actuarial method]]
* [[Depreciation]]
* [[IAS 17]]
* [[Implied rate of interest]]
* [[Reducing balance]]
* [[Straight line]]