Take or pay agreement

what is the effect of using Take or pay agreement on asset, debt and Return on Asset.

i just saw a question like this.they claim it will increase asset and increase debt.

It’s a legal agreement to purchase an asset; to reflect that agreement you increase assets by the amount of the agreement, and increase liabilities by the same amount.

Thanks but Is it an increase in debt or liabities…

It increases liabilities.

I believe that it doesn’t increase debt as it is (probably) not interest-bearing; it’s more like accounts payable.