a fund accumulated from profits by setting aside regular (generally annual) installments sufficent, at compound interest, to replace the capital value of a depreciating asset, e.g., a piece of machinery, at the end of its useful life (when it is written off) or to meet a known, future liability, e.g., repayment of a loan, or to recover an investment, e.g., a leasehold interest in property —note a sinking fund is a form of amortization This definition last updated 10/07/2008