Regardless of where you stand on cryptocurrency, we can probably all agree that companies that hold these digital assets need to be able to properly value them on their balance sheets, and that it is probably something more than “0” and maybe also different than the current trading value, which is difficult to predict.
Some companies have treated digital assets as indefinite-lived intangibles. At a meeting earlier this month, the FASB reached a different (tentative) conclusion on how to account for digital assets, which is part of its project on this topic. Here’s an excerpt from the notes on “tentative Board decisions”:
The Board decided to require an entity to:
1. Measure crypto assets at fair value, using the guidance in Topic 820, Fair Value Measurement.
2. Recognize increases and decreases in fair value in comprehensive income each reporting period.
3. Recognize certain costs incurred to acquire crypto assets, such as commissions, as an expense (unless the entity follows specialized industry measurement guidance that requires otherwise).
The Board also considered:
1. Various measurement alternatives for crypto assets with inactive markets and decided not to pursue those alternatives.
2. Whether to provide implementation guidance relative to the application of fair value measurement of crypto assets and decided not to provide additional measurement guidance as part of this project.
3. Whether there should be a difference for private companies for the measurement of crypto assets and decided that the measurement and recognition requirements should be the same for all entities.
The Board will consider presentation, disclosure, and transition at a future meeting.
– Liz Dunshee