30ASC 440 COMMITMENTS
AUTHORITATIVE LITERATURE
The FASB codification has three related Topics:
- ASC 440, Commitments,
- ASC 450, Contingencies, and
- ASC 460, Guarantees
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 entities and to all relevant transactions. (ASC 440‐10‐15‐1 through 15‐3) However, for guidance on product financing arrangements, the preparer should look to ASC 470‐40‐15 and repurchase agreements within the scope of ASC ...
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