# ASC Topic 440: Commitments Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/440/) 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): 2026-09-10T00:25:16.890Z to 2026-09-10T00:26:47.512Z Record version: sha256:38ac046ca85870a4f68dad846d8366fce2aec1f44b30f350047a40daf75ab239 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic summary ASC 440 is primarily a disclosure Topic: it tells entities what contractual commitments must be described in the notes even when nothing is recorded on the balance sheet. The general Subtopic, 440-10, requires disclosure of items such as unused letters of credit, pledged assets, cumulative preferred dividends in arrears, plant acquisition and debt-reduction/working-capital/dividend-restriction commitments (440-10-50-1), plus off-balance-sheet unconditional purchase obligations (take-or-pay and throughput contracts) that are noncancelable, were negotiated to help finance the supplier's facility, and run more than a year (440-10-50-2 through 50-6); recognition itself is left to Topics 842, 815, and 330 (440-10-25-2 through 25-4). Industry Subtopics add narrow disclosure rules — music artist advances and royalty guarantees (440-928-50-1) and executed but unrecognized broadcast license agreements (440-920-50-1) — while 440-952 (franchisors) is entirely superseded. The one Subtopic with real measurement content is 440-954, which requires a CCRC to remeasure annually and accrue a liability for the obligation to provide future services and use of facilities when fees are insufficient, measured at the present value of future net cash flows less deferred revenue plus facility depreciation and unamortized costs of obtaining a contract (440-954-35-2 through 35-3). Source downloaded (UTC): 2026-09-10T00:25:16.890Z to 2026-09-10T00:25:37.457Z Record version: sha256:d34fdf666a20332305c85d7b142e1e88738a25a51d39182d5010c5b5d0173dcc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-10: Commitments — Overall ### Machine-generated study aids ```json { "summary": "ASC 440-10 is the general \"Commitments\" subtopic: it requires disclosure of certain contractual commitments (unused letters of credit, pledged assets, cumulative preferred dividends in arrears, plant acquisition commitments, obligations to reduce debt, maintain working capital, or restrict dividends) that are not otherwise more explicitly addressed elsewhere in the Codification. Its Unconditional Purchase Obligations Subsections require disclosure of off-balance-sheet take-or-pay and throughput contracts that are noncancelable, were negotiated as part of arranging financing for the supplier's facility, and have a remaining term over one year. The Topic is largely a disclosure standard—recognition of such obligations is governed by other Topics (842, 815, 330).", "key_points": [ "The Topic applies to all entities and provides general commitments guidance, while commitment guidance specific to a Topic or industry resides in that Topic (440-10-05-3, 440-10-15-2).", "Unconditional purchase obligations guidance excludes product financing arrangements within Section 470-40-15 and repurchase agreements within Topic 606 paragraphs 606-10-55-66 through 55-78 (440-10-15-4).", "Sequence of analysis: apply Section 842-10-15 first to see if the obligation is a lease, then apply Sections 815-10-15 and 815-15-15 (and paragraph 815-10-55-60) to any non-lease or embedded-derivative portion (440-10-25-2 through 25-3); accrued net losses on firm inventory purchase commitments are recognized under 330-10-35-17 through 35-18 (440-10-25-4).", "Regardless of more explicit disclosures elsewhere, entities must disclose unused letters of credit, leases, pledged/mortgaged assets, pension plans, cumulative preferred dividends in arrears, and commitments for plant acquisition, debt reduction, working capital maintenance, or dividend restrictions (440-10-50-1).", "An unconditional purchase obligation triggers disclosure only if it is (a) noncancelable (or cancelable only on a remote contingency, with the other party's permission, on signing a replacement agreement, or on a penalty making continuation reasonably assured), (b) negotiated as part of arranging financing for the facilities providing the goods or services, and (c) has a remaining term exceeding one year (440-10-50-2).", "For unrecognized obligations, disclose the nature and term, the fixed and determinable amount at the latest balance sheet date in aggregate and for each of the five succeeding fiscal years, the nature of variable components, and amounts purchased for each income statement period; omission is allowed only if the aggregate undisclosed commitment is immaterial (440-10-50-4).", "If the obligation is recognized on the balance sheet, disclose the aggregate payments for each of the five years following the latest balance sheet date (440-10-50-6); disclosing imputed interest to reduce the obligation to present value is encouraged but not required, using the effective initial rate of the facility financing or, if unknown, the purchaser's incremental borrowing rate (440-10-50-5)." ], "categories": [ "Disclosure", "Contingencies and guarantees", "Recognition", "Leases" ], "audience_level": "intermediate", "student_note": "This is primarily a disclosure Topic, not a recognition Topic—the classic error is assuming an unconditional purchase obligation must be booked as a liability; instead you test it under Topic 842 first, then Topic 815, and if neither applies you only disclose. Memorize the three-part disclosure trigger in 440-10-50-2, especially the often-overlooked requirement that the obligation was negotiated as part of arranging financing for the supplier's facility.", "related_topics": [ "842", "815", "330-10", "470-40", "606", "730-20" ], "key_concepts": [ "unconditional purchase obligation", "take-or-pay contract", "throughput contract", "unused letters of credit", "cumulative preferred dividends in arrears", "five-year payment schedule", "firm purchase commitment", "off-balance-sheet financing" ] } ``` Source downloaded (UTC): 2026-09-10T00:25:16.890Z to 2026-09-10T00:25:16.890Z Record version: sha256:033ced7065561fbf109316b30e475a152f6dbaa84d9469328db79cd0b42ed1c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/440/10/#00-status) SEC content: no ##### [440-10-00-1](https://asc.understandingaccounting.org/asc/440/10/#440-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:16.890Z to 2026-09-10T00:25:16.890Z Record version: sha256:964486cc9823b3df9ba3a9316b78aeac346139dce93d22e836e604ebdedad592 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
440-10-15-4AmendedAccounting Standards Update No. 2014-0905/28/2014
440-10-25-1AmendedAccounting Standards Update No. 2016-0202/25/2016
440-10-25-2AmendedAccounting Standards Update No. 2016-0202/25/2016
440-10-50-1AmendedAccounting Standards Update No. 2023-0610/09/2023
440-10-50-1AmendedAccounting Standards Update No. 2016-0202/25/2016
440-10-50-3AmendedAccounting Standards Update No. 2016-0202/25/2016
440-10-55-1AmendedMaintenance Update 2014-20 (PDF)09/29/2014
440-10-60-4SupersededAccounting Standards Update No. 2018-0706/20/2018
440-10-60-5SupersededAccounting Standards Update No. 2014-0905/28/2014
440-10-60-12AmendedAccounting Standards Update No. 2016-0202/25/2016
440-10-60-13AmendedAccounting Standards Update No. 2016-0202/25/2016
440-10-60-16AmendedAccounting Standards Update No. 2014-0905/28/2014
440-10-60-19SupersededAccounting Standards Update No. 2014-0905/28/2014
440-10-60-20SupersededAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:25:18.964Z to 2026-09-10T00:25:18.964Z Record version: sha256:979accb3da10d73c068604dc1a980f5a4fa910be612eca66dde837506f3bdda0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/440/10/#05-overview-and-background) SEC content: no ##### [440-10-05-1](https://asc.understandingaccounting.org/asc/440/10/#440-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:18.964Z to 2026-09-10T00:25:18.964Z Record version: sha256:57e2534fdb7f818511dfd1285454c8e12fdbfd0b72bb67b0445eeee2fe170a4c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:18.964Z to 2026-09-10T00:25:18.964Z Record version: sha256:8ef0c6f56140e96643c06ad4cbd2c87086bb3aefdc297ed762b4e23c540de556 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:18.964Z to 2026-09-10T00:25:18.964Z Record version: sha256:ebe24d1259a4c45b7da9b315218c30d329e737b27feaa30debfd13aca8728ada Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:18.964Z to 2026-09-10T00:25:18.964Z Record version: sha256:cf12655c09781c560b3a28a23c5dcd9b34a6176ed6359edc1e15004d5f696897 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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."). Source downloaded (UTC): 2026-09-10T00:25:21.962Z to 2026-09-10T00:25:21.962Z Record version: sha256:007f69d506b7974bce76f07fe821207f4e057992ffcb31e09be54d30d1aee471 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/440/10/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [440-10-15-1](https://asc.understandingaccounting.org/asc/440/10/#440-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:21.962Z to 2026-09-10T00:25:21.962Z Record version: sha256:6cc61d0fbf3f77d6eb715d39478d892c21c2b60fa5bbe78a6ed9d531f3f80424 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### Entities ##### [440-10-15-2](https://asc.understandingaccounting.org/asc/440/10/#440-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:21.962Z to 2026-09-10T00:25:21.962Z Record version: sha256:66c8b1e385e069703dd80ebb6298332ad4afc100e4e5b8eb79d62b051069be20 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Commitments Topic applies to all entities. ### Unconditional Purchase Obligations #### Overall Guidance ##### [440-10-15-3](https://asc.understandingaccounting.org/asc/440/10/#440-10-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:21.962Z to 2026-09-10T00:25:21.962Z Record version: sha256:40ee361f35875be1c2a00d936029849d595eab01a8b7ff22849d0c668d5f353c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Unconditional Purchase Obligations Subsections apply to all entities and all [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)."). #### Transactions ##### [440-10-15-4](https://asc.understandingaccounting.org/asc/440/10/#440-10-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:21.962Z to 2026-09-10T00:25:21.962Z Record version: sha256:03bdb79a4347d62e5b892931b0725dbc4a7f03f6466ecaef3126851b55454c35 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Unconditional Purchase Obligations Subsections does not apply to either of the following: 1. a Product financing arrangements, that are within the scope of Section 470-40-15. See paragraph [470-40-05-5](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-5) for a discussion of the distinction between a product financing arrangement and an unconditional purchase obligation. 2. b Repurchase agreements that are within the scope of Topic 606, specifically in paragraphs [606-10-55-66 through 55-78](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-66) . Source downloaded (UTC): 2026-09-10T00:25:26.187Z to 2026-09-10T00:25:26.187Z Record version: sha256:ae6d6248383262b765deb13fbe3c2600222fda2f1c7d92914d745a5ae244a818 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/440/10/#25-recognition) SEC content: no ### Unconditional Purchase Obligations ##### [440-10-25-1](https://asc.understandingaccounting.org/asc/440/10/#440-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:26.187Z to 2026-09-10T00:25:26.187Z Record version: sha256:60d16daac2cc24768a243b217df1a481959ed8919eb6f6d0d4345582a6f420b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Depending on its terms, an [unconditional purchase obligation](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).") can be subject to the guidance in Topic 842, to the guidance in Topic 815, or to neither. ##### [440-10-25-2](https://asc.understandingaccounting.org/asc/440/10/#440-10-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:26.187Z to 2026-09-10T00:25:26.187Z Record version: sha256:d50b25b31041f4eb38d5a44184acc8860776cd3a52ef03c0a2a3d0909ec79ea8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in Section 842-10-15 shall be applied first to determine whether an unconditional purchase obligation is within the scope of Topic 842. ##### [440-10-25-3](https://asc.understandingaccounting.org/asc/440/10/#440-10-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:26.187Z to 2026-09-10T00:25:26.187Z Record version: sha256:41a824fc66334b80590808495bb78bdcff621de0f53b11914bb3af8272febd03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in Section 815-10-15 and paragraph [815-10-55-60](https://asc.understandingaccounting.org/asc/815/10/#815-10-55-60) shall be applied to determine whether any portion of the arrangement that is not a lease is subject to Topic 815, and the guidance in Section 815-15-15 shall be applied to determine whether any lease portion of the arrangement contains an embedded derivative that is subject to the guidance in Subtopic 815-15. ##### [440-10-25-4](https://asc.understandingaccounting.org/asc/440/10/#440-10-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:26.187Z to 2026-09-10T00:25:26.187Z Record version: sha256:a1d7befb091e3395af845428c858a0c41f40bdf6017c3e0c9ef27d1c0c19c3cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pursuant to paragraphs [330-10-35-17 through 35-18](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-17) , accrued net losses on firm purchase commitments for goods for inventory shall be recognized in the accounts. Source downloaded (UTC): 2026-09-10T00:25:28.790Z to 2026-09-10T00:25:28.790Z Record version: sha256:30280e349dba6120602ac4d4a7c89cdefb4ee4fc1acab117fdcd84f644b52c3d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-10-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/440/10/#50-disclosure) SEC content: no ##### [440-10-50-1](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T00:25:28.790Z to 2026-09-10T00:25:28.790Z Record version: sha256:1b3848093a2f25598caf1385f4723c2f9891cde6a98c14b849a965708cc0fb19 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Notwithstanding more explicit disclosures required elsewhere in this Codification, all of the following situations shall be disclosed in financial statements: 1. a Unused letters of credit 2. b Leases (see Section 842-20-50) 3. c Assets pledged as security for loans 4. d Pension plans (see Section 715-20-50) 5. e The existence of cumulative preferred stock dividends in arrears 6. f Commitments, including: 1. 1 A commitment for plant acquisition 2. 2 An obligation to reduce debts 3. 3 An obligation to maintain working capital 4. 4 An obligation to restrict dividends. Transition date:(P) June 30, 2027; (N) June 30, 2027Transition guidance: [105-10-65-7](https://asc.understandingaccounting.org/asc/105/10/#105-10-65-7) Notwithstanding more explicit disclosures required elsewhere in this Codification, all of the following situations shall be disclosed in financial statements: 1. a Unused letters of credit 2. b Leases (see Section 842-20-50) 3. c Assets mortgaged, pledged , or otherwise subject to lien; the approximate amounts of those assets; and the related obligations collateralized 4. d Pension plans (see Section 715-20-50) 5. e The existence of cumulative preferred stock dividends in arrears 6. f Commitments, including: 1. 1 A commitment for plant acquisition 2. 2 An obligation to reduce debts 3. 3 An obligation to maintain working capital 4. 4 An obligation to restrict dividends. ### Unconditional Purchase Obligations ##### [440-10-50-2](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:28.790Z to 2026-09-10T00:25:28.790Z Record version: sha256:f4123aadd8aaeea1b242b32a03f04b301b1755f398111b387183ef2abdfe5317 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [unconditional purchase obligation](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).") that has all of the following characteristics shall be disclosed in accordance with paragraph [440-10-50-4](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-4) (if not recorded on the purchaser's balance sheet) or in accordance with paragraph [440-10-50-6](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-6) (if recorded on the purchaser's balance sheet): 1. a It is noncancelable, or cancelable only in any of the following circumstances: 1. 1 Upon the occurrence of some remote contingency 2. 2 With the permission of the other party 3. 3 If a replacement agreement is signed between the same parties 4. 4 Upon payment of a penalty in an amount such that continuation of the agreement appears reasonably assured. 2. b It was negotiated as part of arranging financing for the facilities that will provide the contracted goods or services or for costs related to those goods or services (for example, carrying costs for contracted goods). A purchaser is not required to investigate whether a supplier used an unconditional purchase obligation to help secure financing, if the purchaser would otherwise be unaware of that fact. 3. c It has a remaining term in excess of one year ##### [440-10-50-3](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:28.790Z to 2026-09-10T00:25:28.790Z Record version: sha256:2ade0ade413837c45a3cd26be8384d48b6b8fcf3ad4b52a85d940f39c429988d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Future [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor.") under [leases](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") that meet the conditions in paragraph [440-10-50-2](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-2) need not be disclosed in accordance with paragraph [440-10-50-4](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-4) or paragraph [440-10-50-6](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-6) if those future lease payments are disclosed in accordance with Section 842-20-50. #### Unrecognized Commitments ##### [440-10-50-4](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:28.790Z to 2026-09-10T00:25:28.790Z Record version: sha256:f4ce6d9749049bc57801f6fe6dc3169f5281a2bc389ce1132aba955faa6e7a67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A purchaser shall disclose unconditional purchase obligations that meet the criteria of paragraph [440-10-50-2](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-2) and that have not been recognized on its balance sheet. Disclosures of similar or related unconditional purchase obligations may be combined. The disclosures shall include all of the following: 1. a The nature and term of the obligation(s) 2. b The amount of the fixed and determinable portion of the obligation(s) as of the date of the latest balance sheet presented, in the aggregate and, if determinable, for each of the five succeeding fiscal years 3. c The nature of any variable components of the obligation(s) 4. d The amounts purchased under the obligation(s) (for example, the [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.") or [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.")) for each period for which an income statement is presented. The preceding disclosures may be omitted only if the aggregate commitment for all such obligations not disclosed is immaterial. ##### [440-10-50-5](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:28.790Z to 2026-09-10T00:25:28.790Z Record version: sha256:2e20fd29de1fe87805f5d8117ac440270d9d0e233b19936034bde41e867290bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Disclosure of the amount of imputed interest necessary to reduce the unconditional purchase obligation(s) to present value is encouraged but not required. The discount rate shall be the effective initial interest rate of the borrowings that financed the facility (or facilities) that will provide the contracted goods or services, if known by the purchaser. If not, the discount rate shall be the [purchaser's incremental borrowing rate](https://asc.understandingaccounting.org/glossary/p/#purchaser-s-incremental-borrowing-rate "The rate that, at the inception of an unconditional purchase obligation, the purchaser would have incurred to borrow over a similar term the funds necessary to discharge the obligation.") at the date the obligation is entered into. #### Recognized Commitments ##### [440-10-50-6](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:28.790Z to 2026-09-10T00:25:28.790Z Record version: sha256:737e4031ea2f45224e6260a2947a3600e5010a2aadda4172b643bb63462fe132 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A purchaser shall disclose for each of the five years following the date of the latest balance sheet presented the aggregate amount of payments for unconditional purchase obligations that meet the criteria of paragraph [440-10-50-2](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-2) and that have been recognized on the purchaser's balance sheet. ##### [440-10-50-7](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:28.790Z to 2026-09-10T00:25:28.790Z Record version: sha256:48c2c7f11a50369ef41461dddf5ba9f6a23a98fad7011659004e9bd5cb9fb1ae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [815-10-50-6](https://asc.understandingaccounting.org/asc/815/10/#815-10-50-6) explains that, if an unconditional purchase obligation is subject to the requirements of both this Subtopic and Subtopic 815-10, the entity shall comply with the disclosure requirements of each Subtopic including paragraph [440-10-50-4](https://asc.understandingaccounting.org/asc/440/10/#440-10-50-4). 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. Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:4d0c8ff250d25b8d2fda3bb2eef683497519d67ce9c7d0d0bdb3c8e905cacb01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-10-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/440/10/#60-relationships) SEC content: no #### Receivables ##### [440-10-60-1](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:6a5d68eb89024cbf4837944a5381da7bac4021a40a5cd83b26c9d3bf8c4fefbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For fees received for a commitment to originate or purchase a loan or group of loans, see Subtopic 310-20. #### Inventory ##### [440-10-60-2](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:1e0d99ac31b2d327d10f0fc692d656405469432184e5256ad90502bf8612300c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on accrual of net losses on firm purchase commitments for goods for inventory, see paragraph [330-10-35-17](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-17). #### Asset Retirement and Environmental Obligations ##### [440-10-60-3](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:8a2b7791cc079cadb26549668509f27073864a1910b0973dd229b6dc4dd50de6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For postremediation monitoring commitments, see Subtopic 410-30. ##### [440-10-60-4](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:f2e2ee700e57533db513971ac3845678940b9c860165b5b7493a6be45883e48c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-07](https://asc.understandingaccounting.org/updates/asu-2018-07/). ##### [440-10-60-5](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:bf6d0a1c92b5d58f9aeacf89a149b06c5ba230bb892323b14a0c2cfe2d535d7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). #### Compensation—Retirement Benefits ##### [440-10-60-6](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:de6be2132a14f5c7a05114c49be5cb4e633351d536211d048d7c73bbc1b363c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For commitments related to pension plans, see Topic 715. #### Other Expenses ##### [440-10-60-7](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:07e1618bacff1ecc07801f23e51c29824c631a7473e5b5c88986da647c7a03bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For commitments to contribute, see Subtopic 720-25. #### Research and Development ##### [440-10-60-8](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:c1b5bf954299fc34e9eb728669e3b2b3c43eb86d70f7fe79b5789e91e578f7a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For royalty arrangements, purchase provisions, license agreements, and commitments to provide additional funding and other commitments under research and development arrangements, see Subtopic 730-20. #### Derivatives and Hedging ##### [440-10-60-9](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:2db88916e77871e472408edcb7a1939d3a82a4f77f6e7acac26be2a409ff9c21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For designating a derivative instrument as a hedge of the exposure to changes in the fair value of an unrecognized firm commitment, see Subtopic 815-25. ##### [440-10-60-10](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:1bb7b50a4b6e408bd31ea167a4946b679078fb5773c5ae1a1851b22c9149e38c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For loan commitments that relate to the origination of mortgage loans that will be held for sale, see paragraph [815-10-15-71](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-71). #### Foreign Currency Matters ##### [440-10-60-11](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:caca24a752d3b2c01c5416466b02c6e3081fd0d796452efb19709c70ac818cac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For foreign currency commitments, see paragraph [830-20-35-3](https://asc.understandingaccounting.org/asc/830/20/#830-20-35-3). #### Leases ##### [440-10-60-12](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:845d5596af7c9d36342a6cea34362096ef1e90d0686b3d7a1711b389aa9845b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For commitments under [leases](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration."), see Topic 842 ##### [440-10-60-13](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:7626ee9ac24f49e495231908523db3e6311f506291b8bed99d2b81591abd2476 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For nuclear fuel leases structured as [take-or-pay contracts](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."), see paragraph [842-10-55-1](https://asc.understandingaccounting.org/asc/842/10/#842-10-55-1). #### Transfers and Servicing ##### [440-10-60-14](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:58cea2a17a418cf82fd46001f3448cb9f0e41b62fe2f4d2a6709ce95229aa38d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For assets pledged as collateral for secured borrowings, see Subtopic 860-30. #### Financial Services—Mortgage Banking ##### [440-10-60-15](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:d85b70139cc0e717cbd162f4c5c7efd622d09ba9439d6fe5146d9284f296528e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For fair value of committed and uncommitted mortgage loans and mortgage-backed securities, see Section 948-310-35. ##### [440-10-60-16](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:d45e5eb275171e3d40316320423b05a40d7c70252c092ecbb867575fab5c1232 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For recognition of loan and commitment fees, see paragraph [948-310-35-7](https://asc.understandingaccounting.org/asc/310/948/#310-948-35-7). ##### [440-10-60-17](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:b5fb76e11b240f45786d5b64a54d951c85210f1e2f27c857404670fe35889062 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For commitment fees relating to loans held for sale (residential or commercial loan commitment fees), see paragraph [948-720-25-1](https://asc.understandingaccounting.org/asc/720/948/#720-948-25-1). #### Health Care Entities ##### [440-10-60-18](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:b0a95493114911dd908ad732afcd60cef133462f7856c9498996802d3762d457 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For prepaid health care services contracts, see paragraph [954-450-25-4](https://asc.understandingaccounting.org/asc/450/954/#450-954-25-4). ##### [440-10-60-19](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:dccd310744e5ed388c36f6a85a119eb01c0e4bc0a32fc7da7cc725377af89aa1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [440-10-60-20](https://asc.understandingaccounting.org/asc/440/10/#440-10-60-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:35.069Z to 2026-09-10T00:25:35.069Z Record version: sha256:4f7b1d87a73062e7094f62d24932f8a863c5880c25b49a76f51536ba60e04e3b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). Source downloaded (UTC): 2026-09-10T00:25:39.571Z to 2026-09-10T00:25:49.511Z Record version: sha256:7831bf51d097347fd08610ad6a7fae0ceb2282ee3c31f82b2b2a730f1e88a103 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-920: Commitments — Entertainment—Broadcasters ### Machine-generated study aids ```json { "summary": "This Subtopic governs disclosure by broadcasters of program license agreements that have been signed (executed) but that do not yet qualify for recognition as an asset and liability on the balance sheet. The single rule is that such executory license commitments must be disclosed in the notes, even though they are not recorded, because the recognition conditions in 920-350-25-2 have not been met.", "key_points": [ "Per 440-920-05-1, the Subtopic addresses only the disclosure of executed broadcast license agreements that fail the conditions for recording a liability.", "Per 440-920-50-1, broadcasters shall disclose commitments for license agreements that have been executed but were not reported because they do not meet the recognition conditions in 920-350-25-2.", "Recognition of the license asset and corresponding liability is governed elsewhere (920-350-25-2); this Subtopic supplies only the disclosure requirement for the unrecognized commitments.", "Per 440-920-15-1, the scope follows the broadcaster scope and scope exceptions in Section 920-10-15." ], "categories": [ "Disclosure", "Industry-specific", "Recognition" ], "audience_level": "intermediate", "student_note": "Exam trap: signing a program license contract does not by itself create a recorded liability for a broadcaster — recognition waits until the 920-350-25-2 conditions are met, but the signed commitment must still be disclosed in the notes.", "related_topics": [ "920-350", "920-10", "440-10", "920-405" ], "key_concepts": [ "program license agreement", "broadcaster", "unrecorded commitment", "executory contract", "license liability recognition conditions", "commitment disclosure" ] } ``` Source downloaded (UTC): 2026-09-10T00:25:39.571Z to 2026-09-10T00:25:39.571Z Record version: sha256:015fb0dd801c3b5a39767f4fc0fc6ddc6b43bc7b055e133f8eb64d7dcdc25fb6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-920-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/440/920/#05-overview-and-background) SEC content: no ##### [440-920-05-1](https://asc.understandingaccounting.org/asc/440/920/#440-920-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:39.571Z to 2026-09-10T00:25:39.571Z Record version: sha256:c020baf80c910c4c7ca41556afb4ab35ed36091d674a04bae8d6503af97907f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic presents the required disclosures by [broadcasters](https://asc.understandingaccounting.org/glossary/b/#broadcaster "An entity or an affiliated group of entities that transmits radio or television program material.") for [license agreements](https://asc.understandingaccounting.org/glossary/l/#license-agreement "A typical license agreement for program material (for example, features, specials, series, or cartoons) covers several programs (a package) and grants a television station, group of stations, network, pay television, or cable television system (licensee) the right to broadcast either a specified number or an unlimited number of showings over a maximum period of time (license period) for a specified fee.") that have been executed but that do not meet the conditions for recording a liability in the financial statements. Source downloaded (UTC): 2026-09-10T00:25:42.720Z to 2026-09-10T00:25:42.720Z Record version: sha256:7600786dad4bfb24b7d22c208499c172f3f521b4b59db7ef4a8f4cff06d7c451 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-920-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/440/920/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [440-920-15-1](https://asc.understandingaccounting.org/asc/440/920/#440-920-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:42.720Z to 2026-09-10T00:25:42.720Z Record version: sha256:e764cf3aecf18a6aecc634289b645366e30e28c9acc14122e7684cd2a94398d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 920-10-15. Source downloaded (UTC): 2026-09-10T00:25:47.818Z to 2026-09-10T00:25:47.818Z Record version: sha256:fb2531244be6118c902ba1cc9b14cfc50385534f51fa26798d0661ddd31f402b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-920-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/440/920/#50-disclosure) SEC content: no #### License Agreements for Program Material Where Criteria for Recognition Has Not Been Met ##### [440-920-50-1](https://asc.understandingaccounting.org/asc/440/920/#440-920-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:47.818Z to 2026-09-10T00:25:47.818Z Record version: sha256:7d0124ed3d14fce82aeb340f1aed22dfb0a66f4fbe03e077467ae3b632b38f00 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Broadcasters](https://asc.understandingaccounting.org/glossary/b/#broadcaster "An entity or an affiliated group of entities that transmits radio or television program material.") shall disclose commitments for [license agreements](https://asc.understandingaccounting.org/glossary/l/#license-agreement "A typical license agreement for program material (for example, features, specials, series, or cartoons) covers several programs (a package) and grants a television station, group of stations, network, pay television, or cable television system (licensee) the right to broadcast either a specified number or an unlimited number of showings over a maximum period of time (license period) for a specified fee.") that have been executed but were not reported because they do not meet the conditions for recording a liability as specified in paragraph [920-350-25-2](https://asc.understandingaccounting.org/asc/350/920/#350-920-25-2). Source downloaded (UTC): 2026-09-10T00:25:52.692Z to 2026-09-10T00:26:04.387Z Record version: sha256:3604445c56f600181d0b064c96a2f175795402103ed920062d0c66405fde20d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-928: Commitments — Entertainment—Music ### Machine-generated study aids ```json { "summary": "This Subtopic sets the disclosure requirement for commitments in the music industry. An entity must disclose commitments to pay artist advances in future years and any guarantees obligating it to pay royalties in the future (440-928-50-1). It contains no recognition or measurement guidance—only disclosure.", "key_points": [ "The Subtopic addresses disclosure of commitments to pay artist advances in the future and guarantees obligating the entity to pay future royalties (440-928-05-1).", "Scope follows the Entertainment—Music Overall Subtopic scope, Section 928-10-15 (440-928-15-1).", "Commitments for artist advances payable in future years shall be disclosed (440-928-50-1).", "Future royalty guarantees shall be disclosed (440-928-50-1).", "No recognition, initial measurement, or subsequent measurement guidance is provided in this Subtopic; it is disclosure-only." ], "categories": [ "Disclosure", "Contingencies and guarantees", "Industry-specific" ], "audience_level": "intermediate", "student_note": "Remember this is a pure disclosure rule: an unpaid future artist advance commitment or royalty guarantee is disclosed even though it is not yet recognized as a liability. Students often confuse it with the recognition/capitalization rules for advances in ASC 928-340.", "related_topics": [ "928-10", "928-340", "928-430", "440-10", "460-10" ], "key_concepts": [ "artist advances", "royalty guarantees", "future commitments disclosure", "music industry", "unrecorded commitments" ] } ``` Source downloaded (UTC): 2026-09-10T00:25:52.692Z to 2026-09-10T00:25:52.692Z Record version: sha256:53e9063c067c03d30c51e90edccc129660be457e60e8178e14e195b69f422902 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-928-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/440/928/#05-overview-and-background) SEC content: no ##### [440-928-05-1](https://asc.understandingaccounting.org/asc/440/928/#440-928-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:52.692Z to 2026-09-10T00:25:52.692Z Record version: sha256:11002b8b6f98abe382f557ff4fac3ebc656de04b94ce0454b51054b9a421b909 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic addresses the disclosure requirements for commitments made by an entity in the music industry to pay artist advances in the future, and for any guarantees obligating the entity to pay [royalties](https://asc.understandingaccounting.org/glossary/r/#royalties "Amounts paid to record producers, songwriters, or other artists for their participation in making records and to music publishers for their copyright interest in music. Amounts for artists are determined by the terms of personal service contracts negotiated between the artists and record entities and usually are determined based upon a percentage of sales activity and license fee income, adjusted for estimated sales returns. Royalties for publishing are based on the copyright or other applicable laws, but the requirements of the law may be modified by licenses issued by the publishers.") in the future. Source downloaded (UTC): 2026-09-10T00:25:55.202Z to 2026-09-10T00:25:55.202Z Record version: sha256:9253bb2c7915d0baddf970e2aa4b96e7946575b8f510889ebb3422df99415b43 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-928-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/440/928/#15-scope-and-scope-exceptions) SEC content: no ##### [440-928-15-1](https://asc.understandingaccounting.org/asc/440/928/#440-928-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:25:55.202Z to 2026-09-10T00:25:55.202Z Record version: sha256:ef945c61861b69be6356098a26cdfb5cbcfde53a963c94f343f0fb5daed99558 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 928-10-15. Source downloaded (UTC): 2026-09-10T00:26:00.412Z to 2026-09-10T00:26:00.412Z Record version: sha256:7a10fcd06323b3539783b92c178642d351a78c70dcdc898134b8b6b5c9203627 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-928-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/440/928/#50-disclosure) SEC content: no #### Licensor Accounting ##### [440-928-50-1](https://asc.understandingaccounting.org/asc/440/928/#440-928-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:00.412Z to 2026-09-10T00:26:00.412Z Record version: sha256:76ddd1604c3de3e30f6d7e3c92465525cfe920921b090f77fca706b632ed8b59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Commitments for artist advances payable in future years and future [royalty](https://asc.understandingaccounting.org/glossary/r/#royalties "Amounts paid to record producers, songwriters, or other artists for their participation in making records and to music publishers for their copyright interest in music. Amounts for artists are determined by the terms of personal service contracts negotiated between the artists and record entities and usually are determined based upon a percentage of sales activity and license fee income, adjusted for estimated sales returns. Royalties for publishing are based on the copyright or other applicable laws, but the requirements of the law may be modified by licenses issued by the publishers.") guarantees shall be disclosed. Source downloaded (UTC): 2026-09-10T00:26:07.459Z to 2026-09-10T00:26:21.596Z Record version: sha256:a61d756458f08bd52acf5044b5df88e41be828ac6801019eddb5d5567c8c6639 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-952: Commitments — Franchisors ### Machine-generated study aids ```json { "summary": "ASC 440-952 was the franchisor-specific extension of the Commitments topic, but every substantive paragraph (05-1 overview, 15-1 scope, and 50-1 disclosure) was superseded by Maintenance Update 2017-09. The subtopic therefore contains no remaining guidance; franchisor commitment and disclosure requirements now fall under the general Commitments guidance in ASC 440-10 and, for franchise revenue, ASC 606.", "key_points": [ "All three paragraphs of this subtopic — 440-952-05-1, 440-952-15-1, and 440-952-50-1 — were superseded by Maintenance Update 2017-09, leaving no operative guidance.", "Because the subtopic is empty, a franchisor's unconditional purchase obligations and other commitments are disclosed under the general requirements of ASC 440-10.", "The supersession was part of the codification cleanup accompanying the new revenue standard, which relocated franchisor guidance formerly in ASC 952 to ASC 606.", "Students should not cite 440-952 as authority; a search that lands here must be redirected to ASC 440-10, ASC 606, or the ASC 952 subtopics that remain effective." ], "categories": [ "Disclosure", "Industry-specific", "Transition and effective dates" ], "audience_level": "introductory", "student_note": "The only thing to know here is that this subtopic is a shell — every paragraph was superseded by Maintenance Update 2017-09. The common mistake is citing a superseded paragraph as live GAAP instead of going to ASC 440-10 for commitments or ASC 606 for franchise revenue.", "related_topics": [ "440-10", "952", "952-606", "606", "606-10" ], "key_concepts": [ "superseded guidance", "commitments", "franchisor", "disclosure of commitments", "codification cleanup" ] } ``` Source downloaded (UTC): 2026-09-10T00:26:07.459Z to 2026-09-10T00:26:07.459Z Record version: sha256:6a8c6dca86bfb37889bca59db52ff045052e27afaaa32d6c5afa089ce6adbb48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-952-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/440/952/#00-status) SEC content: no ##### [440-952-00-1](https://asc.understandingaccounting.org/asc/440/952/#440-952-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:07.459Z to 2026-09-10T00:26:07.459Z Record version: sha256:4024674ae7e4bc7ca1448784383900f6cd185516f062e735d1913ce6f39b432f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
FranchisorSupersededMaintenance Update 2017-09 (PDF)05/30/2017
952-440-05-1SupersededMaintenance Update 2017-09 (PDF)05/30/2017
952-440-15-1SupersededMaintenance Update 2017-09 (PDF)05/30/2017
952-440-50-1SupersededMaintenance Update 2017-09 (PDF)05/30/2017
Source downloaded (UTC): 2026-09-10T00:26:11.513Z to 2026-09-10T00:26:11.513Z Record version: sha256:ccc3d51a53f8bf30b83cf891c59ac0a57cd579f7ed4d90fe0716ee6856be7045 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-952-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/440/952/#05-overview-and-background) SEC content: no ##### [440-952-05-1](https://asc.understandingaccounting.org/asc/440/952/#440-952-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:11.513Z to 2026-09-10T00:26:11.513Z Record version: sha256:b9f3fc54d6b9e007aaa1200519d5e9de919ee326458871cd0df932a384536072 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Maintenance Update 2017-09.](https://asc.understandingaccounting.org/updates/maintenance-updates-2017/) Source downloaded (UTC): 2026-09-10T00:26:15.076Z to 2026-09-10T00:26:15.076Z Record version: sha256:4abb8e6aad11bed3d80cbc5e480ab00fdc74bc74d32326ddb8c73d476001c784 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-952-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/440/952/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [440-952-15-1](https://asc.understandingaccounting.org/asc/440/952/#440-952-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:15.076Z to 2026-09-10T00:26:15.076Z Record version: sha256:60eba624165ca10e3deaec3a6d02515db128410698f836374fde8ea27f80b280 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Maintenance Update 2017-09.](https://asc.understandingaccounting.org/updates/maintenance-updates-2017/) Source downloaded (UTC): 2026-09-10T00:26:17.532Z to 2026-09-10T00:26:17.532Z Record version: sha256:bf80daccfc71ebb0d1c9b1bcb06f8014d57392beb32471eb856fa5712af96202 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-952-20: 20 Glossary [Read section](https://asc.understandingaccounting.org/asc/440/952/#20-glossary) SEC content: no Source downloaded (UTC): 2026-09-10T00:26:21.596Z to 2026-09-10T00:26:21.596Z Record version: sha256:cb79283e87a371114abb813a1edc1b68b71a0b8272a6fa2da2bb0203119d7091 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-952-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/440/952/#50-disclosure) SEC content: no ##### [440-952-50-1](https://asc.understandingaccounting.org/asc/440/952/#440-952-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:21.596Z to 2026-09-10T00:26:21.596Z Record version: sha256:2ffd2bf844ef33d268ef3920e6a025885f21a2e3d3e6b17111b4cd0ffa7076ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Maintenance Update 2017-09.](https://asc.understandingaccounting.org/updates/maintenance-updates-2017/) Source downloaded (UTC): 2026-09-10T00:26:23.932Z to 2026-09-10T00:26:47.512Z Record version: sha256:937150cd0ac9d61088da6574e7a701ee6e294abc3b95f589b66a85d35364c4bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954: Commitments — Health Care Entities ### Machine-generated study aids ```json { "summary": "This subtopic governs the commitment of a continuing care retirement community (CCRC) to provide future services and the use of facilities to current residents under continuing-care contracts. The CCRC must recalculate that obligation annually and, if advance fees plus periodic fees are insufficient to cover the cost of future services and facilities, record a liability measured actuarially at the present value of future net cash flows, less deferred revenue (contract liability), plus depreciation of facilities to be charged to those contracts and any unamortized incremental costs of obtaining a contract. Extensive note disclosure about the contracts, liability, discount rate, escrow requirements, and refund policy is required.", "key_points": [ "A CCRC's obligation to provide future services and the use of facilities to current residents must be calculated/measured annually to determine whether a liability is reported (440-954-25-2; 440-954-35-1).", "A liability is recorded only when advance fees and periodic fees charged are insufficient to meet the costs of providing future services and facilities; it equals expected costs (resident-care, dietary, health care, facility, interest, depreciation, and amortization) over residents' remaining lives in excess of anticipated revenues, based on actuarial assumptions such as mortality and morbidity (440-954-35-2).", "Measurement formula: present value of future net cash flows, minus the balance of deferred revenue (contract liability) under Topic 606, plus depreciation of facilities to be charged to the contracts, plus any unamortized incremental costs of obtaining a contract under Subtopic 340-40 (440-954-35-3).", "The calculation is made by grouping contracts by type (for example, contracts with limits on annual fee increases versus contracts with unlimited fee increases) (440-954-35-3).", "Cash inflows include contractually committed revenue, monthly fees with contractual increases, third-party payments, committed investment income, donor pledges, and deferred nonrefundable advance fees; cash outflows are operating expenses including interest but excluding selling and general and administrative expenses; the expected inflation rate is considered in setting the discount rate, and life spans used must be the same as those used to recognize revenue (440-954-35-3).", "Contract types are all-inclusive, modified, and fee-for-service continuing-care contracts, with payment structured as advance fee only, advance fee with periodic fees, or periodic fees only (440-954-05-4; 440-954-05-6).", "Required disclosures for each year presented: description of the CCRC and nature of the continuing-care contracts, carrying amount of the present-value liability (if not shown separately on the balance sheet), the discount interest rate, statutory escrow or similar requirements, and the refund policy and general amount of refund obligation (440-954-50-1)." ], "categories": [ "Recognition", "Subsequent measurement", "Disclosure", "Industry-specific" ], "audience_level": "intermediate", "student_note": "This is the classic CCRC \"future service obligation\" test: it is a loss-recognition style calculation done annually, so no liability appears if fees are adequate. Students often forget that the deferred revenue balance and unamortized contract acquisition costs are backed out of (or added to) the present value computation, and that SG&A is excluded from the cash outflows.", "related_topics": [ "954-440", "954-430", "606", "340-40", "954-10" ], "key_concepts": [ "continuing care retirement community", "continuing-care contract", "obligation to provide future services and use of facilities", "advance fees and periodic fees", "refundable advance fees", "actuarial assumptions", "present value of future net cash flows", "deferred revenue (contract liability)" ] } ``` Source downloaded (UTC): 2026-09-10T00:26:23.932Z to 2026-09-10T00:26:23.932Z Record version: sha256:a1663cb0871ae79eb2d57be1d20b462fd9509b05a8598e65d358fb06f5832adf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/440/954/#00-status) SEC content: no ##### [440-954-00-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:23.932Z to 2026-09-10T00:26:23.932Z Record version: sha256:3587927d30234c84cc764b02eeb0da1ae7a67777e450b4860e620df0ed07480f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Conditional ContributionAddedAccounting Standards Update No. 2018-0806/21/2018
Contract LiabilityAddedAccounting Standards Update No. 2014-0905/28/2014
ContributionAmendedAccounting Standards Update No. 2018-0806/21/2018
ContributionAmendedAccounting Standards Update No. 2010-0701/28/2010
Donor-Imposed ConditionAddedAccounting Standards Update No. 2018-0806/21/2018
Promise to GiveAddedAccounting Standards Update No. 2018-0806/21/2018
954-440-05-3 through 05-10
AddedAccounting Standards Update No. 2014-0905/28/2014
954-440-35-3AmendedAccounting Standards Update No. 2014-0905/28/2014
954-440-55-1AmendedAccounting Standards Update No. 2014-0905/28/2014
954-440-55-4AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:cfd927955f563ea6cc462e1982491f58ccd7007e630051809dfc732ad986ac20 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/440/954/#05-overview-and-background) SEC content: no ##### [440-954-05-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:b1a269bb2ffa94362c14a8ab8f3b3c3001daa05fd50c6a229f264c47ae1eaf99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on commitments for health care entities within the scope of this Topic. #### Continuing Care Retirement Community ##### [440-954-05-2](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:00df7036be5af2d0d688d73a7da946e707b985f919246f0b04deaa399f6cb9b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A continuing care retirement community expects to provide services and the use of facilities to individuals over their remaining lives under continuing-care contract agreements. The nature and extent of such services depend on such variables as the individual's age, health, sex, and economic status upon entering the continuing care retirement community. ##### [440-954-05-3](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:4fdaebb3621de54684764d351a54786970aa362ae28812d352fef2235fced0e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Continuing care retirement community facilities may be independent or they may be affiliated with other health care facilities. They usually provide less intensive care than do hospitals. They generally supply required continuous nursing service or appropriate assistance to residents who have a wide range of medical conditions and needs. ##### [440-954-05-4](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:31140c5956ea1d53747e8fded629a41749e97f0246238d04b40c58bf047bd720 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Continuing care retirement communities use the following three basic types of contracts: 1. a An all-inclusive continuing-care contract includes residential facilities, meals, and other amenities. It also provides long-term nursing care for little or no increase in periodic fees, except to cover normal operating costs and inflation. 2. b A modified continuing-care contract also includes residential facilities, meals, and other amenities. However, only a specified amount of long-term nursing care is provided for little or no increase in periodic fees, except to cover normal operating costs and inflation. After the specified amount of nursing care is used, residents pay either a discounted rate or the full per diem rates for required nursing care. 3. c A fee-for-service continuing-care contract includes residential facilities, meals, and other amenities as well as emergency and infirmary nursing care. Access to long-term nursing care is guaranteed, but it may be required at full per diem rates. ##### [440-954-05-5](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:dbbe6f94725a65c6a16177b149f999df1fe873ca8cdd623cf2f692982d998705 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many continuing-care contracts are similar to annuity contracts. Under those contracts, the continuing care retirement community assumes the risks associated with both of the following: 1. a Estimating the amount of the advance fee and other fees to be paid by a resident 2. b Determining whether such fees will be sufficient to cover the cost of providing a resident's required services and the use of facilities. For some contracts, residents may share the future costs without limit. The continuing care retirement community has an obligation to provide future services for the length of the contract or the life of the resident. In certain circumstances, this obligation continues regardless of whether advance fees or periodic fees are sufficient to meet the costs of providing services to a resident. ##### [440-954-05-6](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:0c3c14ae7851d25938199759d226421ad39433119b97abd8f9dfd2e89521090f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A continuing care retirement community may require several different payment methods for services and the use of facilities. The following are the three most prevalent methods: 1. a Advance fee only. Under this method, a resident pays an advance fee in return for future services and the use of facilities. Such services generally include continuing care retirement community housing-related services (for example, meals, laundry, housekeeping, and social services) and health care. These services usually are provided to the resident for the remainder of his or her life or until the contract is terminated. Additional periodic fees are not paid, regardless of how long a resident lives or if the resident requires more services than anticipated. Generally, the resident receives no ownership interest in the facility. 2. b Advance fee with periodic fees. Under this method, a resident pays an advance fee and periodic fees for services and the use of facilities. Such periodic fees may be fixed, or they may be subject to adjustment for increases in operating costs or inflation or for other economic reasons. 3. c Periodic fees only. Under this method, a resident pays a fee at periodic intervals for services and the use of the facilities provided by the continuing care retirement community. Such fees may be either fixed or adjustable. ##### [440-954-05-7](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:31187338dac38bdc614969e8dff8d52bf6d52d8d22fa44c676083ac3f683a6d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An advance fee may be met by transferring a resident's personal assets (which may include rights to future income) or by paying a lump sum of cash to the continuing care retirement community. Advance fees received for future services may be refunded at the occurrence of some future event, such as death, withdrawal from the continuing care retirement community, termination of the contract, or reoccupancy of a residential unit. The amount of the refund generally is based on contractual provisions or statutory requirements. ##### [440-954-05-8](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:f7ceb24a4b58f958b21d490925a584bcc9cb1ef3c2fe97ee90d23c279eea1a74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Payment of an advance fee generally is required before a resident acquires a right to reside in an apartment or residential unit for life. A portion of advance fees may be refundable by rescission within a legally set time period or if a certain future event occurs, such as the death or withdrawal of a resident or termination of the contract. Some refunds are paid only if a residential unit is reoccupied. ##### [440-954-05-9](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:5dd23b7fcb46b1a0fc1335b799d0abd649eb4d55dabd0d35a7c70b7f0d24bef1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Continuing care retirement community refund policies vary either by region or according to statutory requirements, but generally the amount of the refund is based on provisions specified in a contract. For example, some contracts require a refund of the advance fee, less a reasonable processing fee. Amounts refunded may be based on a fixed amount or percentage, an amount that declines to a fixed amount over time, an amount that declines to zero, or an amount based on the resale amount. Refunds may be contingent on vacating the unit, resale of the unit, or passage of a fixed period of time if the unit is not resold. ##### [440-954-05-10](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:8aee1a03a36d97784c7c495ff000f63f2582af87830c0a0f22b6a7255d8090f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some contracts between a continuing care retirement community and a resident stipulate that all or a portion of the advance fee may be refundable if the contract holder's unit is reoccupied by another person. The source of money for the payment is from the proceeds of the advance fees collected by the continuing care retirement community from the next resident of the reoccupied unit. The terms governing how the proceeds from the next resident are to be paid to the previous resident vary from contract to contract. Source downloaded (UTC): 2026-09-10T00:26:29.565Z to 2026-09-10T00:26:29.565Z Record version: sha256:a2f7cf80960b34fe5f98f74343bbdebcc7ff013d3a98702d826c3406586a96e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/440/954/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [440-954-15-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:29.565Z to 2026-09-10T00:26:29.565Z Record version: sha256:2bf61ee2d7bfe208a5144825e9db4e975e623e7e08650544cec6f241df1535f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 954-10-15. Source downloaded (UTC): 2026-09-10T00:26:34.890Z to 2026-09-10T00:26:34.890Z Record version: sha256:09cace5207aae20ce964c40472c44ccde0101cfc0e66b3739f7dea5a97597a73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/440/954/#25-recognition) SEC content: no #### Continuing Care Retirement Community ##### [440-954-25-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:34.890Z to 2026-09-10T00:26:34.890Z Record version: sha256:380e346b1cb10db738645753e975422ab9d5424a73de50ef8a26c7ea0c2473c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The continuing care retirement community assumes a risk in estimating the cost of future services and the use of facilities. Although many continuing care retirement communities are allowed contractually to increase periodic fees, some contracts may restrict increases in periodic fees and require continuing services without additional compensation. ##### [440-954-25-2](https://asc.understandingaccounting.org/asc/440/954/#440-954-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:34.890Z to 2026-09-10T00:26:34.890Z Record version: sha256:fd37074dcce43289931d921d86ccdfb559c175eff955cd6498227cbf973513f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [954-440-35-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-35-1) requires that the obligation of a continuing care retirement community to provide future services and the use of facilities to current residents be calculated annually to determine whether a liability shall be recognized in the financial statements. ##### [440-954-25-3](https://asc.understandingaccounting.org/asc/440/954/#440-954-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:34.890Z to 2026-09-10T00:26:34.890Z Record version: sha256:3d8f78f0ebced476539da89888e54e88104f898511fc40e329dbacb31240dfb8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraph [954-440-55-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-55-1)) for an illustration of this guidance. Source downloaded (UTC): 2026-09-10T00:26:38.957Z to 2026-09-10T00:26:38.957Z Record version: sha256:85dba59cc2206d08bfd99d16423dcf75345994021a071f169d40c6179590b937 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/440/954/#35-subsequent-measurement) SEC content: no #### Continuing Care Retirement Community ##### [440-954-35-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:38.957Z to 2026-09-10T00:26:38.957Z Record version: sha256:24b00007c00883ba1b11aa9971079b30e433e1c8974be73dfa23081ec04c41e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The obligation of a continuing care retirement community to provide future services and the use of facilities to current residents shall be subsequently measured annually in order to determine whether a liability shall be reported in the financial statements. ##### [440-954-35-2](https://asc.understandingaccounting.org/asc/440/954/#440-954-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:38.957Z to 2026-09-10T00:26:38.957Z Record version: sha256:b626dd5b54d6e8e27459b1adeb91d9e1f04be6309d02c053a16c3dc43c771906 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the advance fees and periodic fees charged are insufficient to meet the costs of providing future services and the use of facilities, the continuing care retirement community shall record a liability based on actuarial assumptions (such as mortality and morbidity rates), on estimates of future costs and revenues, and on the specific continuing care retirement community's historical experience and statistical data. The liability is equal to the amount that is expected to be incurred to provide services and the use of facilities to individuals over their remaining lives under continuing care contracts (including resident-care, dietary, health care, facility, interest, depreciation, and amortization costs) in excess of the related anticipated revenues. ##### [440-954-35-3](https://asc.understandingaccounting.org/asc/440/954/#440-954-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:38.957Z to 2026-09-10T00:26:38.957Z Record version: sha256:da0c142acc037a963a1ed21625a6fc3f6ee1fec9d8c438db536d73b4e9af7d08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability related to continuing-care contracts shall be the present value of future net cash flows, minus the balance of deferred revenue ([contract liability](https://asc.understandingaccounting.org/glossary/c/#contract-liability "An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.")) (see Topic 606), plus depreciation of facilities to be charged related to the contracts, plus any unamortized incremental costs of obtaining a contract (see Subtopic 340-40), if applicable. The calculation shall be made by grouping contracts by type, such as all contracts with a limit on annual increases in fees, contracts with unlimited fee increases, and so forth. Cash inflows shall include revenue contractually committed to support the residents and inflows resulting from monthly fees including anticipated increases in accordance with contract terms. This shall include third-party payments, contractually or statutorily committed investment income from services related to continuing care retirement community activities, [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") pledged by donors to support continuing care retirement community activities, and the volume of deferred nonrefundable advance fees. Cash outflows shall be composed of operating expenses, including interest expense and excluding selling, and general and administrative expenses. Anticipated cost increases affecting these operating expenses shall be considered in determining cash outflows. The expected inflation rate as well as other factors shall be considered in determining the discount rate. In calculating the liability, the specific continuing care retirement community's historical experience or statistical data relating to the residents' life spans shall be used. The life spans used shall be the same as those used to recognize revenue. For a new continuing care retirement community, either relevant data of similar communities in the area or relevant national industry statistics may be used if they are deemed to be representative. ##### [440-954-35-4](https://asc.understandingaccounting.org/asc/440/954/#440-954-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:38.957Z to 2026-09-10T00:26:38.957Z Record version: sha256:20c735bd0f6423ef372f8d485314ff8410899a404cb44ae75546f87777dfc094 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraph [954-440-55-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-55-1)) for an illustration of this guidance. Source downloaded (UTC): 2026-09-10T00:26:40.780Z to 2026-09-10T00:26:40.780Z Record version: sha256:27dfe97652fcab789bdad4fe827f17cb7aaa338373f7ae38b7ccc62d02f1f5b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/440/954/#50-disclosure) SEC content: no #### Continuing Care Retirement Community ##### [440-954-50-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:40.780Z to 2026-09-10T00:26:40.780Z Record version: sha256:cc79f67171d02e8c92b2e1cea33d6c3863d921dde700c95cf9e39ad8bc21b325 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A continuing care retirement community shall disclose all of the following in its notes to the financial statements for each year presented: 1. a A description of the continuing care retirement community and the nature of the related continuing-care contracts entered into by the continuing care retirement community 2. b The carrying amount of the liability to provide future services and the use of facilities related to continuing-care contracts that is presented at present value in the financial statements (if not separately disclosed in the balance sheet) 3. c The interest rate used to discount that liability to provide future services 4. d The statutory escrow or similar requirements 5. e The refund policy of the continuing care retirement community and the general amount of refund obligation under the existing contracts. Source downloaded (UTC): 2026-09-10T00:26:42.942Z to 2026-09-10T00:26:42.942Z Record version: sha256:0fe3587c0c304d6cd1fd940b29ef134827c87be4dba1147dfce629899ffb07e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/440/954/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [440-954-55-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:42.942Z to 2026-09-10T00:26:42.942Z Record version: sha256:df940942e703dfd2b063cde29b9593531fb6ca80e31062856afbe14f6c39213d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in Sections 954-440-25 and 954-440-35. This Example has the following assumptions: 1. a All residents pay a $ 50,000 fee, which is refundable less 2 percent per month for the first 36 months. After that period, none of the fee is refundable. The continuing care retirement community opened on 1/1/X4. 2. b An additional periodic fee of $1,000 is payable monthly with a 5 percent increase annually. 3. c The asset recognized for the incremental cost of obtaining the contract on 12/31/X6 is assumed to be $17,000. 4. d The deferred revenue ([contract liability](https://asc.understandingaccounting.org/glossary/c/#contract-liability "An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.")) on 12/31/X6 is assumed to be $27,027. ##### [440-954-55-2](https://asc.understandingaccounting.org/asc/440/954/#440-954-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:42.942Z to 2026-09-10T00:26:42.942Z Record version: sha256:203fd9217ee45386d358e43cf417c6cb5b842673db02d12d2bccbf09a4955c74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following tables illustrate the present value of net cash flow on 12/31/X6. - ![](https://asc.understandingaccounting.org/asc-img/GUID-0742E35A-7E88-410D-8880-066FF26A944B-low.gif) "Estimated Remaining Life (in Months) on 12/31/X6" Estimated Cash Inflows Resident 19X7 19X8 19X9 20X0 A 36 " $12,000 " " $12,600 " " $13,230 " - B 22 " 12,000 " " 10,500 " - - C 27 " 12,000 " " 12,600 " " 3,308 " - D 38 " 12,000 " " 12,600 " " 13,230 " " $2,315 " Estimated cash inflows " $48,000 " " $48,300 " " $29,768 " " $2,315 " - ![](https://asc.understandingaccounting.org/asc-img/GUID-40489FB1-7CD4-409D-A45B-A9A04421F508-low.gif) "Estimated Remaining Life (in Months) on 12/31/X6" Estimated Cash Outflows Resident 19X7 19X8 19X9 20X0 A 36 " $10,000 " " $12,000 " " $15,000 " - B 22 " 15,000 " " 11,000 " - - C 27 " 14,000 " " 17,000 " " 5,000 " - D 38 " 8,000 " " 12,000 " " 14,000 " " $4,000 " Estimated cash outflows " $47,000 " " $52,000 " " $34,000 " " $4,000 " Recapitulation 19X7 19X8 19X9 20X0 Cash inflows " $48,000 " " $48,300 " " $29,768 " " $2,315 " Cash outflows " (47,000)" " (52,000)" " (34,000)" " (4,000)" " $1,000 " " $(3,700)" " $(4,232)" " $(1,685)" Present value of net cash flows discounted at 10 percent " $(7,137)" ##### [440-954-55-3](https://asc.understandingaccounting.org/asc/440/954/#440-954-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:42.942Z to 2026-09-10T00:26:42.942Z Record version: sha256:33ec1aebd69290d6d8fad54d25df9af77c45587bd635ab19bc87ba1fa60880af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following tables illustrate the depreciation of facilities to be charged to current residents. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B8BB8644-E80F-4411-9C3E-CC685A0AB4B1-low.gif) Original cost of facility " $17,000,000 " Cost of facility allocable to revenue-producing service areas " $(2,000,000)" Cost of facility to be allocated to residents (including common areas) " $15,000,000 " Useful life 40 years Annual depreciation using straight-line method " $375,000 " Number of residents expected to occupy the facility 200 Annual depreciation per resident " $1,875 " Monthly depreciation per resident $156 - ![](https://asc.understandingaccounting.org/asc-img/GUID-F14F3925-61FA-4719-A91F-1640E99F3D55-low.gif) Resident "Estimated Remaining Life (in Months) on 12/31/X6" 19X7 19X8 19X9 20X0 A 36 " $1,875 " " $1,875 " " $1,875 " - B 22 " 1,875 " " 1,560 " - - C 27 " 1,875 " " 1,875 " 468 - D 38 " 1,875 " " 1,875 " " 1,875 " $312 Yearly estimated depreciation of facilities to be charged to current residents " $7,500 " " $7,185 " " $4,218 " $312 Total estimated depreciation of the use of facilities to be charged to the current residents " $19,215 " ##### [440-954-55-4](https://asc.understandingaccounting.org/asc/440/954/#440-954-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:42.942Z to 2026-09-10T00:26:42.942Z Record version: sha256:fe9331004334769ffda1c8704ebaf31780b2419cd2de28d19bddfa6269773c0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table illustrates the liability for providing future services and the use of facilities to current residents. - ![](https://asc.understandingaccounting.org/asc-img/GUID-11365D79-EF72-4119-A43B-6EA0A5C9CEA4-low.gif) Present value of future net cash outflows " $7,137 " Minus: Deferred revenue (contract liability) on 12/31/X6 " $(27,027)" Plus: Depreciation to be charged to current residents " $19,215 " Asset recognized for the incremental cost of obtaining the contract—see paragraph 954-440-55-1(c) " $17,000 " (a) Liability for providing future services and the use of facilities to current residents on 12/31/X6 " $16,325 " (a) "These numbers are for illustrative purposes only and no inference has been made as to the recoverability of the $17,000." Source downloaded (UTC): 2026-09-10T00:26:44.619Z to 2026-09-10T00:26:44.619Z Record version: sha256:038bb03abf161483f362ba211d32f3a4789c73efab632aea9aae8bb602c85ac5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/440/954/#60-relationships) SEC content: no ##### [440-954-60-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:44.619Z to 2026-09-10T00:26:44.619Z Record version: sha256:53591bc5483ea04e46d52442eb708daf5f5e59911c300fcb72844be25eb0e082 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Section not used](https://asc.understandingaccounting.org/updates/page-1833002/).