Question: On March 1, 2008, a company established a sinking fund in connection with an issue of bonds due in 2019. At December 31, 2010, the

On March 1, 2008, a company established a sinking fund in connection with an issue of bonds due in 2019. At December 31, 2010, the independent trustee held cash in the sinking fund account representing the annual deposits to the fund and the interest earned on those deposits. How should the sinking fund be reported in the company’s balance sheet at December 31, 2010?

a. The cash in the sinking fund should appear as a current asset.

b. Only the accumulated deposits should appear as a noncurrent asset.

c. The entire balance in the sinking fund account should appear as a current asset.

d. The entire balance in the sinking fund account should appear as a noncurrent asset.

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