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What is a bond sinking fund?

A bond sinking fund is similar to restricted cash in the sense that the company must put aside to buy back bonds that the company had issued. A separate trustee would hold the cash for the company, which is why it is labeled as restricted cash. The company would classify the bond sinking fund as a non-current asset on its balance sheet.

Basically, its just cash set aside by the company to cover any bond payments it would need to make to holders of the bonds.

Bond sinking fund

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