Have you heard about crypto?
That is a joke, by the way. By now everyone has heard about crypto.
Crypto is a hot topic and a polarising topic the world over. Some view it as a potential saviour to a declining US dollar. Some view it as nothing more than an over-hyped Ponzi scheme. The crypto bull run in 2021 followed by a crypto market crash in 2022 led to many people losing money, including some billionaires.
Governments around the world are still scrambling to define crypto as a friend or foe.
In Australia, for example, the government has recently (March 2023) completed a ‘token mapping’ exercise with a goal of developing tighter regulation of crypto and a means for making it safer for consumers.
In the accounting world, the increasing acceptance of crypto-assets is leading to a rethink of financial reporting, specifically in the area of fair value accounting. As digital assets become more prevalent, they are changing the way financial holdings are viewed and managed, although traditional assets such as cash, inventory, and equipment still play a significant role in many businesses’ financial statements.
This has prompted the Financial Accounting Standards Board (FASB) in the United States to explore accounting for and disclosure of a subset of exchange-traded digital assets and exchange-traded commodities.
FASB published a proposed Accounting Standards Update (ASU) on March 23, 2023, which would add a new subtopic to the FASB Codification: Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60), Accounting for and Disclosure of Crypto Assets, which is intended to improve the accounting for and disclosure of certain crypto assets.
This proposed standard would require an entity to measure certain crypto assets at fair value each reporting period in the statement of financial position and recognise changes in fair value in net income. The amendments in the proposed ASU would apply to all entities holding crypto assets that meet specific criteria. While the proposed guidance is not yet final, it provides insight into how the FASB views accounting for digital assets and may impact future accounting standards in the US relating to other types of digital assets.
Kreston Global has recently published their client update for May 2023, which includes updates and further information about fair value accounting for Crypto assets. Herb Chain, who works for CBIZ MHM – the US firm of Kreston Global, examines the consequences of the newest FASB guidance.
Read full article here.
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Kreston Stanley Williamson
*Correct as of 11 May 2023
*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under professional standards legislation.
