The following table identifies the changes made to this Subtopic.
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:
- a
General
- b
Unconditional Purchase Obligations.
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.
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.
The Unconditional Purchase Obligations Subsections provide guidance for unconditional purchase obligations, including
take-or-pay and
throughput contracts.
The General Subsection of the Scope Section of the Overall Subtopic establishes the pervasive scope for the Commitments Topic, with specific exceptions noted in the other Subsections of this Section.
The guidance in the Commitments Topic applies to all entities.
The Unconditional Purchase Obligations Subsections apply to all entities and all
unconditional purchase obligations.
The guidance in the Unconditional Purchase Obligations Subsections does not apply to either of the following:
- a
Product financing arrangements, that are within the scope of Section
470-40-15. See paragraph
470-40-05-5 for a discussion of the distinction between a product financing arrangement and an unconditional purchase obligation.
- b
Repurchase agreements that are within the scope of Topic 606, specifically in paragraphs .
Notwithstanding more explicit disclosures required elsewhere in this Codification, all of the following situations shall be disclosed in financial statements: - a
Unused letters of credit
- b
- c
Assets pledged as security for loans
- d
- e
The existence of cumulative preferred stock dividends in arrears
- f
Commitments, including:
- 1
A commitment for plant acquisition
- 2
An obligation to reduce debts
- 3
An obligation to maintain working capital
- 4
An obligation to restrict dividends.
(P) June 30, 2027; (N) June 30, 2027
105-10-65-7 Notwithstanding more explicit disclosures required elsewhere in this Codification, all of the following situations shall be disclosed in financial statements: - a
Unused letters of credit
- b
- c
Assets mortgaged, pledged , or otherwise subject to lien; the approximate amounts of those assets; and the related obligations collateralized
- d
- e
The existence of cumulative preferred stock dividends in arrears
- f
Commitments, including:
- 1
A commitment for plant acquisition
- 2
An obligation to reduce debts
- 3
An obligation to maintain working capital
- 4
An obligation to restrict dividends.
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.
This Example illustrates the guidance in paragraphs
.
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.
For assets pledged as collateral for secured borrowings, see Subtopic
860-30.
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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 \"