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The fund for rebuilding a structure when its economic life is over is termed as :

  • A.salvage value fund
  • B.maintenance fund
  • C.sinking fund
  • D.scrap value fund

Answer: C

It is the sinking fund.

A sinking fund is built up by setting aside a fixed sum every year, which earns compound interest, so that by the end of the structure's economic life the fund equals the cost of rebuilding or replacing it.

Salvage value is what the structure is worth at the end of its life without being dismantled, and scrap value is what its materials fetch when it is dismantled; neither is a fund for rebuilding. A maintenance fund pays for upkeep during the structure's life.

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