More definitions such as sinking fund requirement in dictionary s. Sinking funds and other levies are the primary means by which strata management funds the upkeep, improvement, and replacement of shared and common property across lots. A sinking fund is an account a corporation uses to set aside money. A sinking fund is a fund established by an economic entity by setting aside revenue over a period of time to fund a future capital expense, or repayment of a longterm debt. Sinking fund provision, examples how sinking funds work in. What is the difference between a sinking fund and an emergency fund.
Commonly, strata lot owners will have a requirement to upkeep their. To understand this, lets take a simple sinking fund example of how we plan to. Member services marketplace committees chapters search software. A sinking fund is an account a corporation uses to set aside money earmarked to pay off the debt from a bond or other debt issue. The role of funds and funding in business explained with examples. A sinking fund is a means of repaying funds borrowed through a bond issue through periodic payments to a trustee who retires part of the issue by purchasing the bonds in. As per wikipedia a sinking fund is a fund established by an economic entity by setting aside revenue over a period of time to fund a future capital expense or repayment of a longterm debt.
A sinking fund is a fund where a company sets aside money for future repayment of bonds. A condition included in some corporate bond indentures that requires the issuer to retire a specified portion of debt each year. A sinking fund is an essential financial plan for any strata scheme, allowing the owners corporation to set aside funds for future capital expenditure. The term sinking fund refers to assets and their earnings earmarked for a specific purpose. Over 1,600 companies are managing software spend, usage, contracts. A sinking fund is an account that is used to deposit and save money to repay a debt or replace a wasting asset in the future. Sinking fund definition of sinking fund by merriamwebster. Sinking fund defined and explained for business and finance. Sinking fund of cooperative housing society definition adda. A health savings account is a good example of a sinking fund. Any principal due at maturity is called the balloon maturity. These funds are contributed by lot owners towards the expenditures necessary for the communal space theyve bought a portion of, and are both required under law, as well as stringently managed to prevent misuse. A sinking fund and other levies are the primary means by which strata.
Keep yourself updated with the byelaws, you can click here. Sinking fund calculation and utilization mysocietyclub. In north america and elsewhere where it is common for public and private corporations to raise funds through the issue of bonds, the term is normally used in this context. In other words, its like a savings account that you deposit money in regularly and can only be used for a set purpose. Definition of sinking fund requirement in the financial dictionary by free online english dictionary and encyclopedia. A sinking fund is an essential financial plan for any strata scheme, allowing the owners. What is a sinking fund and why do companies use them. For example, upon conversion, deductible interest expense for dividend. Sinking fund requirement financial definition of sinking. Good credit ratings increase the demand for a companys bonds from. Business firms use sinking funds to build cash pools for future use retiring bonds, making acquisitions, or investing. Sinking fund bonds reduce both the risk to bondholders and the borrowing costs. Sinking funds help businesses set aside money to pay off bonds, but theres more to them than just that. Sinking funds for funding investments and retiring debt.
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