During which period is depreciation calculated in the sum of years' digits method?

In the sum of years' digits method, depreciation is calculated over the entire useful life of the asset. This method involves allocating a larger portion of the asset's cost to the earlier years of its life and progressively smaller amounts in the later years, reflecting the asset's accelerated loss of value when it is newer.

The correct understanding is that depreciation applies to the entire period during which the asset is expected to be in use, typically spanning multiple years, specifically 12 consecutive months for each year until it is disposed of or fully depreciated. Thus, option B accurately captures this ongoing process throughout the asset's life cycle.

The other options misconstrue the timeframe of depreciation calculation. For instance, limiting depreciation to one calendar year overlooks the accrual of depreciation over multiple years. Similarly, restricting the calculation to just the first month or the last year fails to comprehend the method’s design, which aims to spread the cost over the asset’s entire useful life.