Automation & Workflow Productivity Conference

ASU 2023-08

Pdf Summary

FASB Accounting Standards Update 2023-08, issued in December 2023, changes U.S. GAAP for crypto assets to improve relevance, comparability, and transparency for investors. The update applies to all entities holding crypto assets that meet specific scope criteria: the asset must be an intangible asset, not provide enforceable rights to goods or services, exist on a blockchain or similar distributed ledger, be secured by cryptography, be fungible, and not be issued by the reporting entity or related parties.<br /><br />The core accounting change is that qualifying crypto assets must be subsequently measured at fair value each reporting period, with gains and losses recognized in net income. This replaces the prior cost-less-impairment model used for indefinite-lived intangible assets, which recognized declines in value but not increases until sale. The new guidance also requires separate balance sheet presentation of crypto assets from other intangible assets, and separate income statement presentation of remeasurement gains and losses from other intangible asset changes.<br /><br />The update adds enhanced disclosure requirements for both interim and annual reporting. Entities must disclose, for each significant crypto asset holding, the name, cost basis, fair value, and number of units held, along with aggregated information for immaterial holdings. Annual disclosures also require a rollforward of crypto asset activity, including additions, dispositions, gains, and losses, plus descriptions of those activities, cumulative realized gains and losses on dispositions, and the method used to determine cost basis. Entities must also disclose restrictions on sale, including fair value, duration, and circumstances that could cause restrictions to lapse.<br /><br />The update is effective for fiscal years beginning after December 15, 2024, including interim periods, with early adoption permitted. Transition requires a cumulative-effect adjustment to opening retained earnings or equivalent equity/net assets.

Keywords

FASB ASU 2023-08

crypto assets

U.S. GAAP

fair value accounting

net income

intangible assets

blockchain

financial disclosures

retained earnings adjustment

early adoption