What is the formula to determine the denominator for the SYD method?

The correct approach to determine the denominator for the Sum-of-the-Years-Digits (SYD) method involves calculating the total of the years of the asset's useful life. The formula for this is derived from the sum of an arithmetic series, where the useful life is represented by the number of years each year is summed.

The SYD method uses the formula ( n(n + 1)/2 ), where ( n ) corresponds to the total number of years the asset is expected to provide economic benefits. This formula captures the idea that the last year of an asset's life holds a significantly lower weight in terms of depreciation than the earlier years of its life, reflecting how assets generally lose value more quickly in the initial years.

Therefore, using the formula ( 5 \times (5 + 1) / 2 ) accurately calculates the denominator for an asset with a useful life of five years. This provides the total sum of the digits from 1 to 5, which is 15. Each year of the asset's life contributes to this total, allowing for proportional depreciation calculations over the asset's lifespan.

The other choices do not accurately reflect how to calculate the total for the denominator in the SYD method. For instance