The US-focused Financial Accounting Standards Board has published its draft accounting standard for crypto-assets and opened a consultation that runs until June 6. We provided more details on the planned contents in an article last month.
The new standard’s core is to use fair value for crypto-asset accounting. In other words, mark-to-market prices. Before the standard comes into force, crypto-assets are accounted for as intangibles, similar to goodwill. That means the cost is written down when values decline, but when prices go up, that’s not recognized. Hence, when a company implements the new accounting approach, it will need to recognize past gains, which will appear as an adjustment to retained earnings. That means the historical gain will not be recognized in the income statement.
The draft standard also covers disclosures such as the need to report crypto-assets separately from other intangibles and report profits or losses separately. Additionally, a breakdown of significant holdings is required and any restrictions or lockup periods for tokens.
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