FASB Amends Accounting Standards for Disclosure of Crypto Assets to Reflect Fair Value

The Financial Accounting Standards Board (FASB) has amended the accounting standards for and disclosure of crypto assets, as highlighted in the accounting standards update on December 13.

The amendment is based on feedback from stakeholders which shows that the Board needs to prioritize the improvement of the accounting for and disclosure of crypto assets. According to stakeholders, the then accounting for holdings of crypto assets as indefinite-lived intangible assets fails to provide information that facilitates decision-making to investors, lenders, creditors, and other allocators of capital.

“Specifically, accounting for only the decreases, but not the increases, in the value of crypto assets in the financial statements until they are sold does not provide relevant information that reflects (1) the underlying economics of those assets and (2) an entitys financial position,” reads the update.

The amendment requires entities to subsequently measure assets at fair value, with changes recognized in net income for each reporting period. They should separate crypto assets measured at fair value from other intangible assets in the balance sheet and separate changes from the remeasurement of crypto assets from changes in the carrying amounts of other intangible assets in the income statement.

Information to be disclosed for yearly and interim reporting periods includes the name, cost basis, fair value, and number of units for each significant crypto asset holding and the aggregate fair value and cost base of the crypto asset holdings that are not individually significant. Furthermore, they should disclose the fair value of those crypto assets, the nature and remaining duration of the restriction(s), and the circumstances that could cause the restriction(s) to lapse for crypto assets that are subject to contractual sale restrictions.