sinknig fund

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CA Vijeta Verma

CA Vijeta Verma (Querist)
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11 September 2010 is sinking fund A/c & debebenture Redemption Reserve are same?

Nilesh Shah

Nilesh Shah (Expert)
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11 September 2010 No. They are both different. Sinking fund, usually created in accordance with the Co-operative Societies Act. Under the State's Co-operative Societies Act, depreciation is not provided on building, instead, in its place, members have to contribute, periodically, an amount, to the Sinking Fund, to provide for repairs and renewals of the building, in accordance with its bye-laws.

Debenture redemption reserve is created under the Companies Act. Every year, proportionate amount is transferred out of the profits, to provide for the redemption of debenture.

Both are statutorily required to be created.

Sincerely,

Nilesh Shah