# ASC 440-10-55: Commitments — Overall — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/440/10/#55-implementation-guidance-and-illustrations) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:25:30.951Z to 2026-09-10T00:25:30.951Z Record version: sha256:aef58dbe7baedef6b4d242921964fed8fb4e963b8a01f73da44080663a746469 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/440/10/#55-implementation-guidance-and-illustrations) SEC content: no ### Unconditional Purchase Obligations #### Illustrations ##### [440-10-55-1](https://asc.understandingaccounting.org/asc/440/10/#440-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:30.951Z to 2026-09-10T00:25:30.951Z Record version: sha256:554ae5b05f5c91a2a80ea8d18cbbdce74c12725f3bfa40e808ce9f7e8c372bb5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/u/#unconditional-purchase-obligation "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)."). ##### [440-10-55-2](https://asc.understandingaccounting.org/asc/440/10/#440-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:30.951Z to 2026-09-10T00:25:30.951Z Record version: sha256:366fe33452044f9e2216dacfad2525b6c70e3e63e30ff3a55ad5144720495248 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [440-10-50-4 through 50-5](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-4) . ##### [440-10-55-3](https://asc.understandingaccounting.org/asc/440/10/#440-10-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:30.951Z to 2026-09-10T00:25:30.951Z Record version: sha256:8b1df551a365fa14093f05bbe9f14d58c04224a5b4924bca9043436ce551f20a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A has entered into a [throughput contract](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.") 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. ##### [440-10-55-4](https://asc.understandingaccounting.org/asc/440/10/#440-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:30.951Z to 2026-09-10T00:25:30.951Z Record version: sha256:dac198b743485f6fd2d1df74ad71962d9cfef9429aeeb5f40d4ee1be35ea144c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [440-10-55-5](https://asc.understandingaccounting.org/asc/440/10/#440-10-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:30.951Z to 2026-09-10T00:25:30.951Z Record version: sha256:c8e95ac5be59dbd31f9f919d3ede94ebf0191c8e854fbaff4982ed7a8873626a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entity A's disclosure might be as follows. - 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). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-79707E92-DF19-4B98-8E51-A819456282EA-low.gif) 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 " $100,000 " - 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.