Cryptocurrency Accounting Considerations
What Accounting Standards Might Be Used to Account for Cryptocurrency
At first it might appear that Panel C of Table 1 summarizes the accounting treatment of cryptocurrency holdings in the asset. However, even if the token has monetary value, it must be evaluated to determine whether it meets the definition of an intangible asset, as defined in ASC 350, Intangible Assets. A crypto intangible asset is an identifiable, nonmonetary asset that does not have physical substance and is not a derivative. To be considered an intangible asset, the token must meet the recognition criteria in ASC 350, which means it must be probable that the future economic benefits associated with the token will flow to the entity, and the cost of the token can be reliably measured.
Highlights Accounting Considerations for Specialized Entities Engaged in Crypto Asset Activities.
A wave of new crypto-asset issuance has been sweeping the start-up fundraising world sparking the interest of venture capitalists and angel investors. These crypto-assets, usually in the form of tokens, are often used to raise capital in exchange for the promise of a future product or service. However, the accounting treatment of the issuance of crypto-assets can be complex, and there is a great deal of uncertainty about which accounting standards should be applied. This article highlights some of the key accounting considerations for specialized entities engaged in crypto asset activities.
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