FASB To Draft Cryptoasset Disclosure Standard
FASB recently made several tentative decisions regarding its project on cryptoasset disclosure, including the decision to produce an Accounting Standards Update (ASU) exposure draft.
FASB determined public and private entities that hold cryptoassets within the scope of the project would be required to:
- Minimally, present the aggregate amount of cryptoassets separately from other intangible assets measured by means of other measurement bases.
- Present gains and losses on cryptoassets in net income and present them separately from the income statement effects of other intangible assets.
- Classify cryptoassets received as noncash consideration during the ordinary course of business that are converted nearly immediately into cash as operating cash flows.
Additionally, FASB concluded that investment companies should present their financial statements consistent with the presentation requirements in FASB ASC Topic 946, Financial Services — Investment Companies, and not-for-profit entities consistent with the presentation requirements in Topic 958, Not-for-Profit Entities.
FASB also affirmed that disclosures in Topic 820, Fair Value Measurement, would be required in annual and interim periods for cryptoassets within the project’s scope.
In addition, FASB resolved to require an entity to disclose the following:
- At annual and interim periods, the cryptoasset name, fair value, units held and cost basis of each significant cryptoasset holding.
- At annual and interim periods, the fair value and cost basis of other cryptoasset holdings, which may be aggregated into a single line item.
- At annual periods, a reconciliation of activity between the period’s beginning and end for total cryptoasset holdings. This would require an entity to disaggregate information by additions, dispositions, gains and losses during the period and include a description of the additions and dispositions.
- At annual periods, for disposition of cryptoassets during the period, the difference between the sale price and cost basis.
- At interim and annual periods, the fair value of cryptoassets restricted from sale, the nature and remaining duration of the restriction, and the circumstances that could cause a lapse in the restriction(s).
According to FASB staff, the board’s intention would be to go forward with creating the ASU exposure draft in the first half of 2023.