# ASC 470-40: Debt — Product Financing Arrangements Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/470/40/) 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): 2026-09-10T00:32:28.409Z to 2026-09-10T00:32:41.026Z Record version: sha256:2f4a9b809af5488c5099ecde64032ccd3417ad5393daa77cacea17e44e417488 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-40: Debt — Product Financing Arrangements ### Machine-generated study aids ```json { "summary": "ASC 470-40 governs product financing arrangements — transactions in which a \"sponsor\" arranges for another entity to buy and hold inventory on its behalf (or controls the disposition of such product) with a related commitment to buy it back at specified prices covering the other entity's financing and holding costs. Because the sponsor is in substance the owner of the product, the arrangement is accounted for as a borrowing rather than a sale: the sponsor records the inventory as an asset and a corresponding liability when the other entity buys the product (470-40-25-1 through 25-2). After ASU 2014-09, sale-and-repurchase legs are handled under Topic 606, leaving this Subtopic focused on purchases made by another entity on the sponsor's behalf.", "key_points": [ "A product financing arrangement within scope is accounted for as a borrowing, not a sale; the sponsor reports the product as an asset and the related obligation as a liability (470-40-25-1).", "Scope requires both: (a) the sponsor must purchase the product (or substantially identical product or processed goods containing it) at specified prices not subject to change except for finance and holding cost fluctuations, and (b) payments to the other entity are set to cover substantially all fluctuations in its purchasing and holding costs, including interest (470-40-15-2).", "The 'specified price' condition is also met by resale price guarantees, a sponsor purchase option whose economic effect (e.g., a significant penalty) compels exercise, or a put option held by the other entity (470-40-15-2(a)(1) through (3)).", "The sponsor records the asset and related liability when the product is purchased by the other entity, not when the sponsor takes physical delivery (470-40-25-2).", "Costs in excess of the other entity's purchase cost (excluding processing costs) are financing and holding costs accounted for under the sponsor's own policies as incurred by the other entity; interest costs are separately identified and accounted for under Topic 835 (470-40-25-3 through 25-4).", "Excluded from scope: ordinary purchase commitments where the seller retains control, typical contractor-subcontractor relationships, long-term unconditional purchase obligations such as take-or-pay contracts under Subtopic 440-10, unmined/unharvested natural resources and financial instruments, and contracts within Topic 606 including sale-with-repurchase arrangements (470-40-15-3).", "Unlike an unconditional purchase obligation, in a product financing arrangement the product already exists and the other entity's purchase cost is known (470-40-05-6)." ], "categories": [ "Recognition", "Debt and equity", "Inventory and PP&E", "Revenue" ], "audience_level": "intermediate", "student_note": "This is the classic \"substance over form\" inventory-parking rule: a sale that comes with a buyback obligation at a price covering the buyer's carrying costs is really a secured loan, so no revenue is recognized and the inventory never leaves the sponsor's balance sheet. The common mistake is applying 470-40 to a sponsor's outright sale-and-repurchase — ASU 2014-09 moved those to Topic 606 (606-10-55-66 through 55-78), leaving 470-40 for purchases made by another entity on the sponsor's behalf.", "related_topics": [ "606-10", "440-10", "835", "330", "860" ], "key_concepts": [ "product financing arrangement", "sponsor", "in-substance borrowing", "repurchase agreement", "specified prices", "financing and holding costs", "resale price guarantee", "unconditional purchase obligation" ] } ``` Source downloaded (UTC): 2026-09-10T00:32:28.409Z to 2026-09-10T00:32:28.409Z Record version: sha256:2b3c1635270fa9e21f4593d3069efcf403a276e70805abe2368f8fdd04994cb9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-40-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/470/40/#00-status) SEC content: no ##### [470-40-00-1](https://asc.understandingaccounting.org/asc/470/40/#470-40-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:28.409Z to 2026-09-10T00:32:28.409Z Record version: sha256:418ba73e25ae8ee9cca29a40e8423cae04d65a56b1c16bf6cd2ab3b1c1cc0a30 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. 2014-0905/28/2014
CustomerAddedAccounting Standards Update No. 2014-0905/28/2014
RevenueAddedAccounting Standards Update No. 2014-0905/28/2014
Unconditional Purchase ObligationAddedMaintenance Update 2014-20 (PDF)09/29/2014
470-40-05-3AmendedAccounting Standards Update No. 2014-0905/28/2014
470-40-05-5AmendedMaintenance Update 2014-20 (PDF)09/29/2014
470-40-15-2AmendedAccounting Standards Update No. 2014-0905/28/2014
470-40-15-3AmendedMaintenance Update 2015-11 (PDF)06/19/2015
470-40-15-3AmendedMaintenance Update 2014-20 (PDF)09/29/2014
470-40-15-3AmendedAccounting Standards Update No. 2014-0905/28/2014
470-40-25-1 through 25-3
AmendedAccounting Standards Update No. 2014-0905/28/2014
470-40-55-1AmendedAccounting Standards Update No. 2014-0905/28/2014
470-40-55-2AmendedAccounting Standards Update No. 2014-0905/28/2014
470-40-55-3 through 55-5
SupersededAccounting Standards Update No. 2014-0905/28/2014
470-40-55-6AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:86b4bf214db67307f9c8273e861c24890109c4809b5d57b4d7dc6cfd69902b74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-40-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/470/40/#05-overview-and-background) SEC content: no ##### [470-40-05-1](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:9b969c65bd94ee31f6f95e45587463a95b86ae7ded1381689521b3b3ef682d8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic establishes guidance for determining whether an arrangement involving the sale of inventory is in substance a financing arrangement. ##### [470-40-05-2](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:6c1a8c1fa25764a23aa43dfa1effd520c71500e7288b4a18a90e3b4172c8d9cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Product financing arrangements](https://asc.understandingaccounting.org/glossary/p/#product-financing-arrangement "A product financing arrangement is a transaction in which an entity sells and agrees to repurchase inventory with the repurchase price equal to the original sale price plus carrying and financing costs, or other similar transactions.") include agreements in which a sponsor (the entity seeking to finance product pending its future use or resale) does any of the following: 1. a Sells the product to another entity (the entity through which the financing flows), and in a related transaction agrees to repurchase the product (or a substantially identical product) 2. b Arranges for another entity to purchase the product on the sponsor's behalf and, in a related transaction, agrees to purchase the product from the other entity 3. c Controls the disposition of the product that has been purchased by another entity in accordance with the arrangements described in either (a) or (b). ##### [470-40-05-3](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:ee989b361f452ac1af79cacabaa23412f4f2e8ef26d9a5f9cc432143371e9fab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In all of the foregoing cases, the sponsor agrees to purchase the product, or processed goods of which the product is a component, from the other entity at specified prices over specified periods or, to the extent that it does not do so, guarantees resale prices to third parties (see paragraph [470-40-15-2(a)(1)](https://asc.understandingaccounting.org/asc/470/40/#470-40-15-2)). The Implementation Guidance in Section 470-40-55 illustrates the arrangement described in (b) of the preceding paragraph. For an arrangement described in (a), see Topic 606 on [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.") from [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with [customers](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.") for guidance on repurchase agreements in paragraphs [606-10-55-66 through 55-78](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-66) and an illustration on repurchase agreements in Example 62, Case A, paragraphs [606-10-55-401 through 55-404](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-401) . ##### [470-40-05-4](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:d21408e8c5f94b8952174e7d37ee18d1fba35183fc5de8f000bd90e38cccbf6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other characteristics that commonly exist in product financing arrangements but that are not necessarily present in all such arrangements include the following: 1. a The entity that purchases the product from the sponsor or purchases it directly from a third party on behalf of the sponsor was established expressly for that purpose or is an existing trust, nonbusiness entity, or credit grantor. 2. b The product covered by the financing arrangement is to be used or sold by the sponsor, although a portion may be sold by the other entity directly to third parties. 3. c The product covered by the financing arrangement is stored on the sponsor's premises. 4. d The debt of the entity that purchases the product being financed is guaranteed by the sponsor. ##### [470-40-05-5](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:99135683640b1edcbd26f28fc35880291bca296f31c07195d0ec16a1df3904b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are similarities between a sponsor's rights and obligations under a product financing arrangement and a purchaser's rights and obligations under 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).") (see Topic 440): 1. a Both the sponsor and the purchaser obtain probable future economic benefits from the assured source of product. 2. b Both are obligated to make future cash payments to the other party to the agreement. ##### [470-40-05-6](https://asc.understandingaccounting.org/asc/470/40/#470-40-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:31.270Z to 2026-09-10T00:32:31.270Z Record version: sha256:242037841a5524f4da9fd53163c96fea21bcd8a1a0893683b69f5b7720b78600 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Beyond those similarities, however, there is a substantial difference in the related accounting issues. Under a product financing arrangement, the product already exists and the other entity's purchase cost is known. Source downloaded (UTC): 2026-09-10T00:32:34.310Z to 2026-09-10T00:32:34.310Z Record version: sha256:f47faa398238791b6d8ae2de1fdb411520c83b3133a915e0064bdd2db74e1356 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-40-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/470/40/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [470-40-15-1](https://asc.understandingaccounting.org/asc/470/40/#470-40-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:34.310Z to 2026-09-10T00:32:34.310Z Record version: sha256:42dc5d2d130299dcff511a796d16839eaa2156e7ba2edd7a8275245bbd4bcab3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities. #### Transactions ##### [470-40-15-2](https://asc.understandingaccounting.org/asc/470/40/#470-40-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:34.310Z to 2026-09-10T00:32:34.310Z Record version: sha256:ffa4d5f034f683c9937c87456a99e987a2324e0c628df71294bef802e713a6e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to [product financing arrangements](https://asc.understandingaccounting.org/glossary/p/#product-financing-arrangement "A product financing arrangement is a transaction in which an entity sells and agrees to repurchase inventory with the repurchase price equal to the original sale price plus carrying and financing costs, or other similar transactions.") for products that have been purchased by another entity on behalf of the sponsor and have both of the following characteristics: 1. a The financing arrangement requires the sponsor to purchase the product, a substantially identical product, or processed goods of which the product is a component at specified prices. The specified prices are not subject to change except for fluctuations due to finance and holding costs. This characteristic of predetermined prices also is present if any of the following circumstances exist: 1. 1 The specified prices in the financing arrangement are in the form of resale price guarantees under which the sponsor agrees to make up any difference between the specified price and the resale price for products sold to third parties. 2. 2 The sponsor is not required to purchase the product but has an option to purchase the product, the economic effect of which compels the sponsor to purchase the product; for example, an option arrangement that provides for a significant penalty if the sponsor does not exercise the option to purchase. 3. 3 The sponsor is not required by the agreement to purchase the product but the other entity has an option whereby it can require the sponsor to purchase the product. 2. b The payments that the other entity will receive on the transaction are established by the financing arrangement, and the amounts to be paid by the sponsor will be adjusted, as necessary, to cover substantially all fluctuations in costs incurred by the other entity in purchasing and holding the product (including interest). This characteristic ordinarily is not present in purchase commitments or contractor-subcontractor relationships. ##### [470-40-15-3](https://asc.understandingaccounting.org/asc/470/40/#470-40-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:34.310Z to 2026-09-10T00:32:34.310Z Record version: sha256:cb8c7879fbd012dad42892f039dbc73a59614dde2ae24ddfa9ecb723d682bc18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to the following transactions and activities: 1. a Ordinary purchase commitments in which control of the good or service is retained by the seller (for example, a manufacturer or other supplier) until the good or service is transferred to a purchaser. 2. b Typical contractor-subcontractor relationships in which the contractor is not in substance the owner of product held by the subcontractor and the obligation of the contractor is contingent on substantial performance on the part of the subcontractor. 3. c Long-term [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).") (for example, [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.")) specified by Subtopic 440-10 on commitments. At the time a take-or-pay contract is entered into, which is an unconditional purchase obligation, either the product does not yet exist (for example, electricity) or the product exists in a form unsuitable to the purchaser (for example, unmined coal); the purchaser has a right to receive future product but is not the substantive owner of existing product. 4. d Unmined or unharvested natural resources and financial instruments. 5. e [Contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") within the scope of Topic 606 on [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.") from contracts with [customers](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration."). For example, contracts that are subject to a right of return as described in paragraph [606-10-32-10](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-10) and paragraphs [606-10-55-22 through 55-29](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-22) and contracts in which a sponsor (the entity seeking to finance product pending its future use or resale) sells the product to another entity (the entity through which the financing flows) and in a related transaction agrees to repurchase the product (or a substantially identical product). Such contracts are within the scope of Topic 606; see paragraphs [606-10-55-66 through 55-78](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-66) on repurchase agreements and paragraphs [606-10-55-36 through 55-40](https://asc.understandingaccounting.org/asc/606/10/#606-10-55-36) on principal versus agent considerations. 6. f Typical purchases by a subcontractor on behalf of a contractor. In a typical contractor-subcontractor relationship, the purchase of product by a subcontractor on behalf of a contractor ordinarily leaves a significant portion of the subcontractor's obligation unfulfilled. The subcontractor has the risks of ownership of the product until it has met all the terms of a contract. Accordingly, the typical contractor-subcontractor relationship shall not be considered a product financing arrangement. Source downloaded (UTC): 2026-09-10T00:32:39.081Z to 2026-09-10T00:32:39.081Z Record version: sha256:be9324821833c5e5e98210f766b4a8e5414ecbff88649d33a83ab07e218b9c4a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-40-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/470/40/#25-recognition) SEC content: no ##### [470-40-25-1](https://asc.understandingaccounting.org/asc/470/40/#470-40-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:39.081Z to 2026-09-10T00:32:39.081Z Record version: sha256:4384fe838066cc7ac36a726a94378499d4239dd4e382ebf14a448dfcd3227cd9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic requires that a [product financing arrangement](https://asc.understandingaccounting.org/glossary/p/#product-financing-arrangement "A product financing arrangement is a transaction in which an entity sells and agrees to repurchase inventory with the repurchase price equal to the original sale price plus carrying and financing costs, or other similar transactions.") within the scope of this Subtopic be accounted for as a borrowing rather than as a sale. The sponsor is in substance the owner of the product and the sponsor shall, therefore, report the product as an asset and the related obligation as a liability. ##### [470-40-25-2](https://asc.understandingaccounting.org/asc/470/40/#470-40-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:39.081Z to 2026-09-10T00:32:39.081Z Record version: sha256:d0cfa1efe73ee685bda390bcfe1bf425a96a001d4f2e460ddf33227f20ef062b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the sponsor is a party to an arrangement whereby another entity purchases a product on the sponsor's behalf and, in a related transaction, the sponsor agrees to purchase the product or processed goods of which the product is a component from the entity, the sponsor shall record the asset and the related liability when the product is purchased by the other entity. ##### [470-40-25-3](https://asc.understandingaccounting.org/asc/470/40/#470-40-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:39.081Z to 2026-09-10T00:32:39.081Z Record version: sha256:f2725c64f71ab6aa9d28332e5b75f2af6ff64c2ea645c1fc92ff225efa702895 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs of the product, excluding processing costs, in excess of the other entity's purchase costs represent financing and holding costs. The sponsor shall account for such costs in accordance with the sponsor's accounting policies applicable to financing and holding costs as those costs are incurred by the other entity. For example, if insurance costs ordinarily are accounted for as period costs by the sponsor, similar costs associated with the product covered by financing arrangements shall be expensed by the sponsor as those costs are incurred by the other entity. ##### [470-40-25-4](https://asc.understandingaccounting.org/asc/470/40/#470-40-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:39.081Z to 2026-09-10T00:32:39.081Z Record version: sha256:a6d547b3fc2f92944b16a23b7cbef6bfc762e8d01b272e647f64c24ebc15d1ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Interest costs associated with the product covered by financing arrangements shall be identified separately and accounted for by the sponsor in accordance with Topic 835 as those costs are incurred by the other entity. Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:65c509b9e8323f6667284be95a8d0dcc30fae687acba645d400b60c0f18b8735 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 470-40-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/470/40/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [470-40-55-1](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:712a037067a28ed4a0ee979d939bda199c0358a32d4c2c0bc99fd9189468c6f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates how the guidance in paragraphs [470-40-25-1 through 25-4](https://asc.understandingaccounting.org/asc/470/40/#470-40-25-1) applies to [product financing arrangements](https://asc.understandingaccounting.org/glossary/p/#product-financing-arrangement "A product financing arrangement is a transaction in which an entity sells and agrees to repurchase inventory with the repurchase price equal to the original sale price plus carrying and financing costs, or other similar transactions.") in which a sponsor arranges for another entity to purchase the product on the sponsor's behalf and, in a related transaction, agrees to purchase the product from the other entity. 1. a [Subparagraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [470-40-55-2](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:55d52d9192097b3bc7544f951e2e1b68a1ec20f8adace09d18534639d1d4fc1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The facts assumed in this Example are illustrative only and are not intended to modify or limit in any way the provisions of this Subtopic. The facts assumed in the Example could vary in one or more respects without altering the application of the provisions of this Subtopic. ##### [470-40-55-3](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:4751182c079548a17209a3c325f3b3a19b6b8831ef3bab82540e897870e11c73 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/). ##### [470-40-55-4](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:78b81f2cdfa995d84d5a2cded2855fb17f04e0872ba7a7c9df3fba9c82540739 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/). ##### [470-40-55-5](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:a9b5feed6fbcfa293b58bf7f6bb461954c82fb34d4a5fa5b143cd72d0078dde9 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/). ##### [470-40-55-6](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:aacb6c649fb7d54920f04a6d792f5367f7bf740020e0592f9c15a5e8d4450730 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A sponsor arranges for another entity to buy product on the sponsor's behalf with a related agreement to purchase the product from the other entity. ##### [470-40-55-7](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:927eec4c9996371a86e700ae62607c4d7334781bc940a5f2d18c65ceae855c1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sponsor arranges for the other entity to purchase on its behalf an existing supply of fuel. In a related agreement, the sponsor agrees to purchase the fuel from the other entity over a specified period and at specified prices. The prices established are adequate to cover all financing and holding costs of the other entity. The other entity finances the purchase of fuel using the fuel and the agreement as collateral. ##### [470-40-55-8](https://asc.understandingaccounting.org/asc/470/40/#470-40-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:32:41.026Z to 2026-09-10T00:32:41.026Z Record version: sha256:5a5db85c1da1adb7d0325097f606489a46eb3ee836b627328e6dfcb346ca2312 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this product financing arrangement, both of the characteristics in paragraphs [470-40-15-2 through 15-3](https://asc.understandingaccounting.org/asc/470/40/#470-40-15-2) are present; accordingly, the sponsor reports the asset (fuel) and the related liability on its balance sheet when the fuel is acquired by the other entity. Financing and holding costs are accrued by the sponsor as incurred by the other entity and accounted for in accordance with the sponsor's accounting policies for financing and holding costs. Interest costs are separately identified and accounted for in accordance with Topic 835.