While the Financial Accounting Standards Board (FASB) still has not finalized regulations for crypto assets, the organization has determined that companies should measure assets like Bitcoin and Ethereum using fair value accounting—with gains and losses recorded in current period comprehensive income.
The recently made decision is viewed as a major development since there currently are no accounting or disclosure rules specifically for crypto assets. The changes are intended to better reflect the fair value of cryptocurrency holdings on a corporate balance sheet or financial statement, contributing to a more accurate picture of the reporting company’s financial standing.
In its ruling, FASB is requiring a company to:
- Measure crypto assets at fair value, using the guidance in Topic 820, Fair Value Measurement
- Recognize increases and decreases in fair value in comprehensive income each reporting period
- 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)
For more information, visit fasb.org.