Improving the accounting for and disclosure of certain crypto assets is the aim of a proposed accounting standards update (ASU) announced Thursday by the accounting profession.
The Financial Accounting Standards Board (FASB) said the proposed changes in the ASU would improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income.
The changes also would improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, restrictions, and changes in those holdings, FASB said.
FASB said its proposed ASU is in response to feedback it has received that that the accounting for crypto assets as indefinite-lived intangible assets, which is a cost-less-impairment model, does not provide investors with decision-useful information or reflect the underlying economics of those assets.
The proposal would apply to all entities holding crypto assets that:
- Meet the definition of “intangible asset” as defined in the the board’s Accounting Standards Codification Master Glossary;
- Do not provide the asset holder with enforceable rights to, or claims on, underlying goods, services, or other assets;
- Are created or reside on a distributed ledger based on blockchain technology;
- Are secured through cryptography;
- Are fungible;
- Are not created or issued by the reporting entity or its related parties.
Comments are due on the proposal by June 6.