sinking fund

Assets and their earnings earmarked for the retirement of bonds or other long-term obligations. An obligation sometimes imposed pursuant to the issuance of debt securities or preferred shares by which the issuer is required each year to set aside a certain amount to enable the issuer to retire the securities when they mature. A sinking fund may be allowed to accumulate or may be used each year to redeem a portion of the outstanding securities. A fund (usually invested), which will be used to replace improvements as needed. Most commonly set aside from the income of income producing property. A fund arising from particular taxes, imposts or duties, which is appropriated toward the payment of the interest due on a public loan, and for the payment of the principal. Talbott v. City of Lyons, 171 Neb. 186, 105 N.W.2d 918, 925.

In general accounting, segregated assets that are being accumulated for a specific purpose. In governmental accounting, a fund established to accumulate resources for the retirement of bonds but not for the payment of interest, which is handled through the general fund or a special revenue fund

+ sinking fund

The aggregate of sums of money (as those arising from particular taxes or sources of revenue) set apart and invested, usually at fixed intervals, for the extinguishment of the debt of a government or corporation, by the accumulation of interest. A fund arising from particular taxes, imposts, or duties, which is appropriated towards the payment of the interest due on a public loan and for the gradual payment of the principal. A fund created for extinguishing or paying a funded debt.

- sinking fund debenture

@ sinking fund method of depreciation

The periodic charge is an amount so that when the charges are considered to be an annuity, the value of the annuity at the end of depreciable life is equal to the acquisition cost of the asset. In theory, the charge for a period ought also to include interest on the accumulated depreciation at the start of the period as well. A fund of cash is not necessarily, or even usually, accumulated.

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