# ASC 440-10-05: Commitments — Overall — 05 Overview and Background

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/440/10/#05-overview-and-background)

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## ASC 440-10-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/440/10/#05-overview-and-background)

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##### [440-10-05-1](https://asc.understandingaccounting.org/asc/440/10/#440-10-05-1)

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The Commitments Topic establishes standards of financial accounting and reporting for certain commitments. This Topic contains only the Overall Subtopic. The guidance in this Subtopic is presented in the following two Subsections:

1.  a
    
    General
    
2.  b
    
    Unconditional Purchase Obligations.

##### [440-10-05-2](https://asc.understandingaccounting.org/asc/440/10/#440-10-05-2)

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The General Subsections provide guidance for unused letters of credit; preferred stock dividends in arrears; commitments such as those for plant acquisition; and obligations to reduce debts, maintain working capital, or restrict dividends.

##### [440-10-05-3](https://asc.understandingaccounting.org/asc/440/10/#440-10-05-3)

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This Topic provides general guidance for commitments, while other Topics include guidance for commitments that relate specifically to those Topics. In addition, commitments that are unique to a particular industry are discussed in the Topic for that industry, generally under the Commitments Subtopic.

### Unconditional Purchase Obligations

##### [440-10-05-4](https://asc.understandingaccounting.org/asc/440/10/#440-10-05-4)

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The Unconditional Purchase Obligations Subsections provide guidance for unconditional purchase obligations, including [take-or-pay](https://asc.understandingaccounting.org/glossary/t/#take-or-pay-contract "An agreement between a purchaser and a seller that provides for the purchaser to pay specified amounts periodically in return for products or services. The purchaser must make specified minimum payments even if it does not take delivery of the contracted products or services.") and [throughput contracts](https://asc.understandingaccounting.org/glossary/t/#throughput-contract "An agreement between a shipper (processor) and the owner of a transportation facility (such as an oil or natural gas pipeline or a ship) or a manufacturing facility that provides for the shipper (processor) to pay specified amounts periodically in return for the transportation (processing) of a product. The shipper (processor) is obligated to provide specified minimum quantities to be transported (processed) in each period and is required to make cash payments even if it does not provide the contracted quantities.").