Michael Saylor is overjoyed with the FASB’s decision to revisit crypto accounting standards
According to current FASB rules, companies must report virtual property and commodities as “intangible property” on their balance accounts. This is because cryptocurrencies no longer come within the traditional definition of “coins and coins equivalents, financial instruments, monetary property, and inventories.”
Because of the prohibition, businesses such as MicroStrategy, which holds the majority of its assets in Bitcoin, are unable to include crypto as a physical asset on their balance sheet. Companies that possess intangible property must price it at the lowest possible rate for the duration of the reporting period.
Even if the company keeps its position, this reporting norm regularly outcomes in impairment losses for corporations keeping cryptocurrency. Because of the regulation, MicroStrategy incurred approximately $800 million in impairment losses. The enterprise declared an impairment lack of greater than $a hundred and seventy million withinside the first sector alone.
The overview date is unknown due to the fact the FASB has now no longer publicly claimed its conclusion. There is likewise no assurance of success. Adopting an awesome set of legal guidelines that follow completely cryptocurrencies as opposed to normal economic norms, on the alternative hand, will make it less difficult for companies keeping bitcoin to record greater correctly.
Because of the crypto market’s performance in recent months, most Bitcoin holding firms have incurred impairment losses on their holdings. However, these firms, including Tesla, have not suffered significant sales losses and are often profitable.
Townsquare Media is a nice example. The New York-based business declared a $400,000 impairment loss on its BTC stake in the first quarter but sold it for a $1.2 million profit on March 31. MicroStrategy currently faces genuine impairment losses as a result of Bitcoin’s fast decline in value to $28,000. According to its Q1 report, the average purchase price of its BTC holding is $30,700.
Read more at: Due to EU sanctions, Coinbase will terminate some Russian accounts.
