Sinking fund

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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 long-term debt.

In North America and elsewhere where it is common for government entities and private corporations to raise funds through the issue of bonds, the term is normally used in this context. However, in the United Kingdom^[1] and elsewhere^[2] where the issue of bonds (other than government bonds) is unusual, and where long-term leasehold tenancies are common, the term is only normally used in the context of replacement or renewal of capital assets, particularly the common parts of buildings.