Artificial Intelligence Conference

ASU 2023-08

Pdf Summary

FASB Accounting Standards Update 2023-08 improves U.S. GAAP for crypto assets by replacing the current cost-less-impairment model with fair value measurement for qualifying crypto assets. The new guidance applies to intangible assets that are fungible, secured by cryptography, created or held on blockchain or similar distributed ledger technology, do not give enforceable rights to underlying goods, services, or other assets, and are not created or issued by the reporting entity or related parties.<br /><br />Under the update, entities must measure these crypto assets at fair value each reporting period, with all gains and losses recognized in net income. Crypto assets must be presented separately from other intangible assets on the balance sheet, and fair value remeasurement gains and losses must be shown separately from other intangible-asset changes in the income statement.<br /><br />The update also expands disclosures for both interim and annual reporting. Entities must disclose significant crypto asset holdings by name, cost basis, fair value, and units held, along with aggregate information for less significant holdings. They must also disclose sale restrictions, and for annual periods provide a rollforward of crypto asset activity, including additions, dispositions, gains, losses, and the methods used to determine cost basis.<br /><br />For cash flow reporting, cash receipts from crypto assets received as noncash consideration in ordinary business and converted nearly immediately to cash are classified as operating activities. Similar treatment applies to certain not-for-profit transactions.<br /><br />The standard is effective for fiscal years beginning after December 15, 2024, including interim periods within those years. Early adoption is permitted, and adoption requires a cumulative-effect adjustment to opening retained earnings or equivalent equity/net asset balances.

Keywords

FASB Accounting Standards Update 2023-08

crypto assets

fair value measurement

U.S. GAAP

intangible assets

blockchain

disclosure requirements

net income recognition

cash flow classification

effective date