{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/440/10/#55-implementation-guidance-and-illustrations","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"440","topic_title":"Commitments","subtopic":"440-10","subtopic_title":"Overall","section":{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":"Unconditional Purchase Obligations","heading":"Illustrations","paragraphs":[{"citation":"440-10-55-1","para":"55-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Section, which is an integral part of the requirements of this Subtopic, provides general guidance to be used in the disclosure of <a href=\"/glossary/u/#unconditional-purchase-obligation\" class=\"term\" title=\"An obligation to transfer funds in the future for fixed or minimum amounts or quantities of goods or services at fixed or minimum prices (for example, as in take-or-pay contracts or throughput contracts).\"><span>unconditional purchase obligations</span></a>.</div> </div>","snippet":"This Section, which is an integral part of the requirements of this Subtopic, provides general guidance to be used in the disclosure of unconditional purchase obligations.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:554ae5b05f5c91a2a80ea8d18cbbdce74c12725f3bfa40e808ce9f7e8c372bb5","downloaded_from":"2026-09-10T00:25:30.951Z","last_downloaded_at":"2026-09-10T00:25:30.951Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482623","source_sha256":"a0524e46047ce9984a4c15c4003d9a9d84f3f7e36cde6214190272939564bbad"}},{"citation":"440-10-55-2","para":"55-2","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Example illustrates the guidance in paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/440/10/#440-10-50-4\" class=\"xref\">440-10-50-4 through 50-5</a></div>.</div> </div>","snippet":"This Example illustrates the guidance in paragraphs 440-10-50-4 through 50-5.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:366fe33452044f9e2216dacfad2525b6c70e3e63e30ff3a55ad5144720495248","downloaded_from":"2026-09-10T00:25:30.951Z","last_downloaded_at":"2026-09-10T00:25:30.951Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482623","source_sha256":"a0524e46047ce9984a4c15c4003d9a9d84f3f7e36cde6214190272939564bbad"}},{"citation":"440-10-55-3","para":"55-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_58649D91-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Entity A has entered into a <a href=\"/glossary/t/#throughput-contract\" class=\"term\" title=\"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.\"><span>throughput contract</span></a> with a manufacturing plant providing that Entity A will submit specified quantities of a chemical (representing a portion of plant capacity) for processing through the plant each period while the debt used to finance the plant remains outstanding. Entity A's processing charges are intended to be sufficient to cover a proportional share of fixed and variable operating expenses and debt service of the plant. If, however, the processing charges do not cover such operating expenses and debt service, Entity A must advance additional funds to cover a specified percentage of operating expenses and debt service. Such additional funds are considered advance payments for future throughput. </span></span> </div> </div>","snippet":"Entity A has entered into a throughput contract with a manufacturing plant providing that Entity A will submit specified quantities of a chemical (representing a portion of plant capacity) for processing through the plan…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8b1df551a365fa14093f05bbe9f14d58c04224a5b4924bca9043436ce551f20a","downloaded_from":"2026-09-10T00:25:30.951Z","last_downloaded_at":"2026-09-10T00:25:30.951Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482623","source_sha256":"a0524e46047ce9984a4c15c4003d9a9d84f3f7e36cde6214190272939564bbad"}},{"citation":"440-10-55-4","para":"55-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_58649EA1-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Entity A's unconditional obligation to pay a specified percentage of the plant's fixed operating expenses and debt service is fixed and determinable, while the amount of variable operating expenses that Entity A is obligated to pay will vary depending on plant operations and economic conditions. </span></span> </div> </div>","snippet":"Entity A's unconditional obligation to pay a specified percentage of the plant's fixed operating expenses and debt service is fixed and determinable, while the amount of variable operating expenses that Entity A is oblig…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dac198b743485f6fd2d1df74ad71962d9cfef9429aeeb5f40d4ee1be35ea144c","downloaded_from":"2026-09-10T00:25:30.951Z","last_downloaded_at":"2026-09-10T00:25:30.951Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482623","source_sha256":"a0524e46047ce9984a4c15c4003d9a9d84f3f7e36cde6214190272939564bbad"}},{"citation":"440-10-55-5","para":"55-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_58649F76-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Entity A's disclosure might be as follows. </span></span> <ul class=\"ul simple\" id=\"d3e25592-109309__GUID-21B8EB59-FB39-4C9A-BE93-1449DA82450B\"> <li class=\"li\" id=\"d3e25592-109309__SL6395139-109309\"> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_5864A03B-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">To secure access to facilities to process chemical X, the entity has signed a processing agreement with a chemical supplier allowing the entity to submit 100,000 tons for processing annually for 20 years. Under the terms of the agreement, the entity may be required to advance funds against future processing charges if the chemical supplier is unable to meet its financial obligations. The aggregate amount of required payments at December 31, 19X1, is as follows (in thousands). </span></span> </div> <ul class=\"ul simple\" id=\"d3e25592-109309__GUID-F73C4814-1A0E-4A93-910A-EE7A8E1F33C9\"> <li class=\"li\" id=\"d3e25592-109309__SL6395140-109309\"> <div class=\"p\"> <div class=\"fig figure fignone\" id=\"d3e25592-109309__tbl-d3e25658\"> <img src=\"/asc-img/GUID-79707E92-DF19-4B98-8E51-A819456282EA-low.gif\" altsource=\"GUID-79707E92-DF19-4B98-8E51-A819456282EA-low.gif\" alt=\" \" loading=\"lazy\"> <span class=\"sfragment\" id=\"sfr_5864A3C0-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span> <div class=\"figcaption\">19X2 \" $10,000 \" 19X3 \" 10,000 \" 19X4 \" 9,000 \" 19X5 \" 8,000 \" 19X6 \" 8,000 \" Later years \" 100,000 \" Total \" 145,000 \" Less: Amount representing interest \" (45,000)\" Total at present value\t\" $100,000 \" </div></div> </div> </li> </ul> </li> <li class=\"li\" id=\"d3e25592-109309__SL6395141-109309\"> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_5864A484-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"> In addition, the entity is required to pay a proportional share of the variable operating expenses of the plant. The entity's total processing charges under the agreement in each of the past 3 years have been $12 million. </span></span> </div> </li> </ul> </div> </div>","snippet":"Entity A's disclosure might be as follows.\nTo secure access to facilities to process chemical X, the entity has signed a processing agreement with a chemical supplier allowing the entity to submit 100,000 tons for proces…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c8e95ac5be59dbd31f9f919d3ede94ebf0191c8e854fbaff4982ed7a8873626a","downloaded_from":"2026-09-10T00:25:30.951Z","last_downloaded_at":"2026-09-10T00:25:30.951Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482623","source_sha256":"a0524e46047ce9984a4c15c4003d9a9d84f3f7e36cde6214190272939564bbad"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3b1e26ae31a7ea0b1f2604837cde880965ae16f9d7424d3d8a20321b80e77af0","downloaded_from":"2026-09-10T00:25:30.951Z","last_downloaded_at":"2026-09-10T00:25:30.951Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482623","source_sha256":"a0524e46047ce9984a4c15c4003d9a9d84f3f7e36cde6214190272939564bbad"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aef58dbe7baedef6b4d242921964fed8fb4e963b8a01f73da44080663a746469","downloaded_from":"2026-09-10T00:25:30.951Z","last_downloaded_at":"2026-09-10T00:25:30.951Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482623","source_sha256":"a0524e46047ce9984a4c15c4003d9a9d84f3f7e36cde6214190272939564bbad"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aef58dbe7baedef6b4d242921964fed8fb4e963b8a01f73da44080663a746469","downloaded_from":"2026-09-10T00:25:30.951Z","last_downloaded_at":"2026-09-10T00:25:30.951Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482623","source_sha256":"a0524e46047ce9984a4c15c4003d9a9d84f3f7e36cde6214190272939564bbad"}}