Meaning & use
depreciation fund
Last updated
Meanings
nouncountablebusinessfinance
A sum of money saved regularly to pay for replacing a company's assets when they wear out.
Grammar: Countable: you can talk about one depreciation fund or several depreciation funds.
Patterns
- set up a depreciation fund
- contribute to a depreciation fund
- a depreciation fund for something
The company set up a depreciation fund to replace its delivery vans every five years.
Each year, they put $10,000 into a depreciation fund for new computers.
nouncountablebusinessfinance
In accounting, a reserve account showing money set aside for asset replacement.
Grammar: Often used in the plural: depreciation funds appear on the balance sheet.
Patterns
- record a depreciation fund
- the depreciation fund account
The accountant recorded the depreciation fund under long-term liabilities.
Auditors checked the depreciation fund to ensure it matched the company's policy.
Word forms
| plural | depreciation funds |
|---|
Common combinations
- set up a depreciation fund
- The board decided to set up a depreciation fund for the factory machinery.
- contribute to a depreciation fund
- They contribute to a depreciation fund every quarter.
- depreciation fund account
- The depreciation fund account shows a balance of $50,000.
- depreciation fund policy
- The company's depreciation fund policy requires annual reviews.
Synonyms and how they differ
- sinking fund
- A sinking fund is a broader term for money set aside to repay a debt or replace an asset; depreciation fund specifically relates to asset wear and tear.
- reserve fund
- A reserve fund is a general savings account for future needs; depreciation fund is more specific to asset replacement.
Word family
- depreciate verb
- To decrease in value over time.
- depreciation noun
- The process of losing value, or the accounting charge for it.
Commonly confused: depreciation fund or deprecation?
depreciation fund vs deprecation
Deprecation means disapproval or belittling; depreciation refers to loss of value.
Practice
The company ____ a depreciation fund to replace its old equipment.
Choose one answer.
'Set up' means to establish or create something like a fund. 'Set off' means to start a journey or cause an explosion; 'set in' means to begin and seem likely to continue (often of bad weather); 'set out' means to start a journey or intend to do something.
Make it your own
Write a sentence using “depreciation fund”, then check it and compare it with the examples above.