Is Sinking Fund a Current Asset?

A bond sinking fund is reported in the section of the balance sheet immediately after the current assets. ... The bond sinking fund is a long-term (noncurrent) asset even if the fund contains only cash. The reason is the cash in the fund must be used to retire bonds, which are long-term liabilities.

What type of account is sinking fund?

A sinking fund is typically listed as a noncurrent asset—or long-term asset—on a company's balance sheet and is often included in the listing for long-term investments or other investments. Companies that are capital intensive usually issue long-term bonds to fund purchases of new plant and equipment.

Is sinking fund asset a current asset?

Sinking fund accounts do not belong under Current Assets even though they are normally cash accounts. They are not Current Assets because the firm cannot use them as working capital. These funds must remain on deposit until the end of fund life, when they serve their original purpose.