31ASC 440 COMMITMENTS
PERSPECTIVE AND ISSUES
Subtopics
ASC 440, Commitments, contains only one subtopic:
- ASC 440-10, Overall, which provides general guidance on financial accounting and reporting for certain commitments.
The subtopic has two subsections:
- General
- Unconditional Purchase Obligations
The General subsection provides guidance for:
- Unused letters of credit,
- Preferred stock dividends in arrears,
- Commitments such as those for plant acquisitions, and
- Obligations to reduce debts, maintain working capital, or restrict dividends.
- (ASC 440-10-05-2)
The Unconditional Purchase Obligation subsection provides guidance for unconditional purchase obligations, such as throughput and take-or-pay contracts. (ASC 440-10-05-3)
Scope and Scope Exceptions
ASC 440 applies to all transactions. However, for guidance on product financing arrangements, the preparer should look to ASC 470-40-15. Upon implementation of ASU 2014-09, guidance on repurchase agreements within the scope of ASC 606 can be found in ASC 606-10-55-66 through 55-78. (ASC 440-10-15-4)
Overview
All significant contractual commitments must be disclosed in the notes to the financial statements. For example, lease contract provisions, pension obligations, requirements contracts, bond indenture covenants, commitments ...