I am looking for some readings about the treatment of "purchase
commitment"( I am not sure if it is so called professionally). The
materials are supposed to discuss the treatment in this situation:
Company A signed a contract with Company B in which A promised to buy
raw materials from B. However, B's new plant to produce the raw
materials was not set up. B will use the contract to obtain the
financing.
The discussion should be within the framework of accounting rules.