03/27/2024

New FASB Standard Makes it Easier for Companies to Hold Crypto

Read on for insights on the new standard

In 2023, the Financial Accounting Standards Board (FASB) published nine new accounting standard updates (ASUs). Included in this updated guidance came a change to crypto asset standards that made it easier for companies to hold crypto assets on their balance sheet.

Updates to Crypto Asset Standards

Prior to this new standard, crypto assets were required to be accounted for as intangible assets and reported on the balance sheet at historical cost. They were then required to be tested for impairment at least annually and written down if deemed to be impaired (price dropped below historical cost). However, if the price went back up, that impairment could not be recovered. Companies including Tesla, MicroStrategy and Coinbase among others that invest in cryptocurrencies, such as Bitcoin and Ethereum, have complained that this treatment doesn’t accurately reflect the underlying economics of their crypto assets.

In response to these concerns, in December 2023, the FASB issued ASU No. 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. This landmark guidance is the first direct accounting standard on crypto assets and is expected to reduce the cost and complexity associated with applying the current accounting rules and generally make it easier for companies to hold crypto assets.

Please select this link to read the complete article from OSAP Strategic Partner Clark Schaefer Hackett.