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Sum of the year's digits depreciation is calculated as follows:

Step 1.   Equipment life in years calculated by dividing life months by 12 and adding 1 if there is a non-zero remainder.

Step 2.   Sum of the years digits calculated by adding up the integers from 1 to the equipment life in years. For example, if the life in years is 7, the numbers from 1 to 7 (1 + 2 + 3 + 4 + 5 + 6 + 7 = 28) are added.

Step 3.   Remaining life in years calculated by dividing months remaining by 12 and adding 1 if there is a non-zero remainder.

Step 4.   Depreciation for the current month calculated using the following equation:

 (original cost + capitalized cost) * remaining life in years
 Sum of the years digits * 12

Total depreciation taken for the life of the unit cannot exceed the sum of original cost and capitalized cost.